speaking of COT and its implications:
from Aaron Task in theStreet.com:
Thus, it gives me great pleasure to offer yet another reason why you should be bullish: The Nov. 28 Commitment of Traders report from the Commodity Futures Trading Commission showed the net short position by commercial hedgers on the S&P 500 futures contract had risen to 81,194 contracts, the latest in a series of record high levels of shorting by the hedgers. Conversely, the net long position of small traders (aka retail investors) had climbed to 70,473 contracts, also the latest in a series of new highs.
Yesterday, one hedge fund source who's been largely short this year quipped: "Who do you think is more likely to be right," the professional hedgers (aka "the smart money") or the retail speculators?
The source, who shall remain nameless, also observed that "how big the next rally will be is a function of hedgies' covering." Judging by the size of the hedgers' current short position (still growing by last count), "the eventual rally should be mind-boggling," he declared.
The next Commitment of Traders report won't be out for another 10 days or so, so we don't know for sure -- but it's highly unlikely the hedging community has yet made a big dent in its huge short position.
P.S.
As an aside, the term "commercial hedgers" traditionally refers to companies that take positions in commodities markets to lock in prices for raw materials needed for their products, according to Barron's Dictionary of Finance and Investment Terms. In the case of S&P 500 futures, natural hedgers means financial institutions, including the trading arms of Wall Street firms whose strategists have been repeatedly telling clients to buy stocks...
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Aaron L. Task writes daily for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He invites you to send your feedback to Aaron L. Task . |
