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Strategies & Market Trends : Ask DrBob
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To: bcrafty who wrote (45917)10/14/2001 4:43:26 PM
From: ToTradeWell  Read Replies (1) of 100058
 
bcrafty,
I think the COT is very important and we need to learn how to read/interpret it. The only edge we have as "non commercial" traders is to buy strength & sell weakness. (We need the trend on our side)

IMO the commercials are probably starting to hedge a little here. If the COT shows a rise in short interest, it may not mean that the funds are expecting the market to fall. They may just be hedging their long positions, especially as the end of year approaches and they want to get real conservative. Maybe they are wanting to sit on the fence until they see some more market direction. Going short the S&P as a hedge with their long cash (stock) position will allow them to do this.

If they are short some stocks, they may pick up a few S&P longs as a hedge, especially if they have had a good year.

TTW
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