COTS CHARTS! Really Cool! Now, somebody please tell me what they mean!
"Conventional wisdom" says that COTS reports are important because the commercials are among the "smart money," and they tend to "get it right."
I wondered how true that really is, so I spent the past two days making these charts, which show all the changes in long, short, and net positions by the commercials, week by week, from January 2002 through yesterday.
Here's the problem: I'm not sure what, if anything, these charts are saying. My observations so far:
1. Contrary to conventional wisdom, (which, I think, says that the commercials are often early), it appears at least some of the time that, by the time the report comes out, the best knee-jerk response is to short.
2. For some reason, these guys went CLOWN long, (or is it that they covered their shorts clownishly?), on the NDX the week of April 16-23, just as the market tanked. Why would the "smart" money do that?
3. The NDX reports for the past three weeks have been almost perfect contrarian indicators -- IF you could get the data on Tuesday, instead of waiting until Friday. (Hmmm... I wonder if there aren't some folks who CAN get the data on Tuesday?)
Okay, now you guys tell me what's what.
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