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To: marginmike who wrote (84988)3/23/2001 11:18:59 PM
From: John Madarasz  Read Replies (1) of 436258
 
if you look at COT % indicator ( not sure if this a proprietory indicator in the site ), it at a 5 year record high. COT % indicator's high corresponds to the market bottom according to the site. It is the very bottom line on this chart, and the indicators highlight it in green

commitmentsoftraders.com


The %COT indicator is a composite index of the net commercial position in the major futures markets. The index shows a net buying or selling by commercials in all the commodity markets listed in this web site and is calculated by simply adding up the column of the net commercial positions, but reverse the sign on the interest rates, the stock indexes, and the Dollar index. That way they are all a reflection of the net commercials anticipating higher or lower commodity prices.

The premise on using the %COT as an indicator for the stock market index is that the history of the indicator suggest net commercials in the primary commodity futures markets anticipate rising commodity prices all the way into the peak in prices, and the stock market falls all the way into the peak net commercial anticipation of rising prices. Once the net commercial %COT turns down from a high point, the history of the indicator suggests we can then look for a low in the stock market.

The %COT seems to rise and peak into a stock market bottom. It's rise is a coincident indicator of the bottom.

The indicator seems to fall into and turn up at a stock market top. It's bottom is a coincident indicator with the top.

It's certainly not the be all and end all, but to me just another sign that the lows might not be in yet.
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