|
NET
COMMERCIALS AND HEALTHY PULLBACK
by James West
forever a
student of the markets
August
28, 2006
Pullback
I
will try to keep this short and sweet: I believe that the stock market
has bottomed and I am long with stops just below Thursday’s low.
(693 is Thursday’s low for the Russell 2000).
If
the markets close below Thursday’s low, and stay there, all bets are
off… But here is why I think this bottom is for real:
--- Over the last several weeks commercials are buyers of the stock
market.
--- In the last four days of this pullback, advancing issues are
receiving more volume than declining issues.
This is simply telling me that this is a healthy pullback –
if there is such a thing – and that the trend should resume back up
in the very near future.
--- Last week I mentioned support levels for the four indexes that
I cover:
The Russell 2000 violated support at 700; but found support at its 50%
retracement level. The Dow
Jones violated support at 11290; but is holding up well at its 38.2%
retracement level near 11250.
And the S&P 500 and Nasdaq-100 held way above their support levels
at: 1282 – 1285, and 1520 – 1525 respectively.
Broad Markets
Russell
2000 [ http://www.buythebottom.com/rut.html ]
Nothing really new with the COT data, except that the picture
remains bullish as long as net-commercial position is over 10 000
contracts. (Currently
at 11 001)
S&P
500 [ http://www.buythebottom.com/spx.html
]
COT data was little changed from last week for this market.
NASDAQ
100 [ http://www.buythebottom.com/ndx.html
]
Net-commercial position increased by 1861 contracts, and again,
this supports my bullish outlook.
Dow
Jones [ http://www.buythebottom.com/indu.html
]
COT data little changed from last week.
Crude
Oil [ http://www.buythebottom.com/wtic.html
]
It looks like commercial buying pressure is starting to increase,
but this market is still far from being setup for a significant rally.
We may get more clues next week.
Gold
[ http://www.buythebottom.com/gold.html
]
It does indeed looks like commercials are starting to buy gold here,
as large traders are beginning to sell.
I don’t think the market is ready just yet, but it very well
may be in roughly a month or two if this buying persists from the
commercial side.
US
Dollar [ http://www.buythebottom.com/usd.html
]
Much of the same, support at 83.5 for the USD, while commercials
are still net long this market. But
where is the rally? The
US dollar index has been trading sideways for over four months.
Well, I can’t predict when the rally will take place, all I
know is that commercials are buyers and that tends to mean that a
rally is coming…
Cheers,
James
©
2006 James West
Editorial
Archive
Updated
weekly COT charts can be found @ www.buythebottom.com
Mailing
list
I am organizing a mailing list to notify investors when I update the
weekly cot charts and/or publish an article. If you would like to be
added to the list, simply send an email to buythebottom
(at) gmail.com and write “ADD”
in the subject line. Conversely if you want to be removed from the
mailing list once you joined; simply send an email to the same address
and write “REMOVE” in
the subject line.
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
|
