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NET
COMMERCIALS AND
MARKET BREAKOUT
by James West
forever a
student of the markets
August
21, 2006
Broad Markets
The
markets rallied nicely this past week and it looks like that they may
be in need of a quick breather; remember: nothing goes straight up or
straight down for that matter. Other
than that, the rally looks promising as it is lead by the Nasdaq-100
index. If you recall, not
too long ago this same index was leading the way down, breaking below
key-support areas. This
just goes to show you how important it is to remain flexible and to
let the market tell its story. Right
now, chances are that we will see a pullback or a sideways correction.
And how this market
behaves during this resting-period will provide a big clue as to
whether this rally is for real or just another false-breakout.
Russell
2000 [ http://www.buythebottom.com/rut.html ]
Again, COT data for the RUT was little changed and for me this is
a bullish development as long as the net-commercial position remains
in the 5 000 – 10 000 + contracts range, currently
at 10781. Previous
resistance in the 700-710 area is now support in this market.
It will be critical to see how this market behaves when/if the
700 level is re-tested. I
would not be comfortable initiating long positions below 700 on the
RUT. Yes, it is true
that commercials are recent buyers in this market, which tends to mean
that a rally is coming, but that doesn’t mean, and I stress it,
it does not mean that we can’t go lower before we go higher.
So in the intermediate term: above 700 = bull, below 700 =
neutral, below 670 = bear.
S&P
500 [ http://www.buythebottom.com/spx.html
]
Net-commercial position increased by 20
269 contracts. The
picture from the commercial side shows improvement for this market,
and so the green light stays on for the US stock market, at least for
now. Support
for the S&P 500 is in the 1282 – 1285 area.
NASDAQ
100 [ http://www.buythebottom.com/ndx.html
]
Support for the Nasdaq-100 is in the 1520 – 1525 area.
Dow
Jones [ http://www.buythebottom.com/indu.html
]
Support for the Dow Jones is in
the 11 290 – 11 300 area.
Crude
Oil [ http://www.buythebottom.com/wtic.html
]
Commercial selling continues, and so we continue to wait
patiently. The 200-day
moving average is at 67.08, and should provide support for a bottom
and buying opportunity if/when crude trades down to that range.
Gold
[ http://www.buythebottom.com/gold.html
]
It looks like net-commercial position is starting to perk up, but
too early to speculate as of right now.
…Still waiting for a setup.
US
Dollar [ http://www.buythebottom.com/usd.html
]
Critical support for the US Dollar is at $83.50; I am still
looking for this market to rally, as commercials continue to support
the greenback.
all the best,
James
©
2006 James West
Editorial
Archive
Updated
weekly COT charts can be found @ www.buythebottom.com
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CONTACT
INFORMATION
James West
www.buythebottom.com
Toronto, Ontario, Canada
Email: westjam @ gmail.com (Remove the space before and after @ when
sending your email)
The
opinions of FSU contributors do not necessarily reflect those of
Financial Sense
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