no, no, no, no Charles - that is not how you read the chart.
yardeni.com
Look at the absolute peaks in the position of commercial traders, and then look at what happens to the S&P immediately thereafter - especially the two I referred to previously.
Private mail me your fax number [or anyone else here who is interested], and I will send you the S&P futures chart from January 1, 1997 to present and show you exactly where the commercials and the public were at extreme opposite positions (on the same chart), and you can see for yourself exactly what happens (almost immediately) to the S&P futures (right at the peaks - peaks up and valleys down). You will see that in the last three years, almost all of the signals have been bullish (no surprise there)- but you can see that the signals immediately preceded the biggest moves.
The signs (with the commercials so totally opposite the general public) are that things are going to change (and very quickly)- and very much down.
I am not trying to prove myself to anyone. I am trying to provide information to people here that I like and respect. In my own analysis, I know I am right. That is why I own a December 'put' on the S&P and am SUNW free for now.
Could this all be wrong - of course it could. But that is how I am betting it. The commercials are almost always correct.
And by the way, the activity of the commercials and the general public is only the major item. Other things need to be considered. For example, it is true that the commercials are frequently early in building their positions - as are their short positions this year. However, the longer they build their positions and the more extreme they become (especially when the general public is doing the exact opposite - and they are), then the more likely they will be proven correct, and the more severe the reaction is likely to be.
I have only been studying futures for a month, but the proof is in the charts - whether it's corn, crude oil, cotton, sugar, the British Pound or whatever (including the S&P 500) - the commercials are right more than 80% of the time - and much greater than that when tremendous extremes exist as they do in S&P 500 futures right now.
Ken Wilson |
