Friday, August 3, 2012

Weekend Thread

COT Report - Naz Futures (Sentimentrader.com)
This is definitely not what I was expecting to see when I started flipping through the COT reports this afternoon. Commercials are now just as short as they were before the rollover in April-May. The report from last week was that little blip up on the indicator line to -4000. "They are still net short, but not extreme anymore"... I thought last week. I was not expecting this push back to an extreme position so quick. Anyway, that doesn't give me the warm and fuzzies considering I held some longs into the weekend.

A couple of thoughts.... First is that these positions are up to Tuesday of this week, and we had some wild activity yesterday. I'm wondering if they (commercials) were covering. It would certainly explain the heavy volume and zippy action. Naz futures went down 48, up 46, down 43 yesterday... then up 79 to today's high. Second thought is maybe we are getting to a moment where these positions are not as meaningful. I'm shaking my head after typing that because this year it has been pretty accurate when at this kind of extreme.

The COT on VIX is still showing about the same reading as last week (commercials extremely long VIX futures)... so that's also potentially bearish. There was a similar push into shorts in the S&P and Dow futures, although not as much as the Naz. All of this data plus the fact that we are getting closer to a short term "ripe for selling" signal has me anxious to sell longs on Monday (hopefully on a push up). I want to step away from swing long positions and stick with mostly day trades until I see how this data plays out.

Friday Afternoon

And I am very quick.
It's Friday.  How much risk do you want to carry over the weekend?  What do see happening?  You have to have a thesis or every wiggle and squiggly line can make you churn your account.  Of course your broker doesn't mind that one bit. 

Friday Morning

Euro Futures Daily
Euro futures had its biggest daily volume of the September contract yesterday... with the majority of it coming between 1.2270-1.2350ish. There is a potential inverse head and shoulders pattern that might be invalidated by the time this thread comes up (I am putting this thread together at 7:15pm ET Thursday night). If not, it looks like a potential neckline of 1.2350, with a target of 1.2650. An interesting thing about this pattern is that when I zoom out a bit, I see the possibility of another one.

Euro Spot Daily
If the Euro holds the 1.2150ish area and then pushes to 1.2650, it would start to look like potentially an even larger inverse head and shoulders. That's making a lot of assumptions of course, but I thought it was interesting to think about. The larger pattern would have to ping-pong between 1.2350-1.2700 to form a right shoulder and the neckline would be about 1.2700. Assuming that played out, the target on this would be 1.3350.