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Strategies & Market Trends : Trading the SPOOs with Patrick Slevin! -- Ignore unavailable to you. Want to Upgrade?

To: SE who wrote (5992)	7/18/2000 10:48:51 AM
From: Patrick Slevin	Respond to of 7434

That COT is a week old, but I can see that it's a huge position. Or at least it looks huge; they are Short 44,272 SP Contracts. What bothers me a tad more is the Small Traders who are Long 36,908 The commercials, interestingly enough, are pretty much Flat the ND. Anyway, I've always looked at these numbers as somewhat misleading and not just because of the delay. I think the clue is in the name. These are large hedgers. The sort of people who would go Long the Cash and Sell the Future. What could be more logical....it's like a CBOE MM who Sells you the Calls and buys the underlying security except they have less downside risk. After all, if their Cash position goes down they make up for it on the Futures plus the trimming of Premium. If the Futures position goes against them they make it up on the Cash plus the trimming of Premium. It appears to be a wash. I would think they watch stuff like the Premium and scale higher or lower based on whether the Futures are at a discount or a premium to the Cash.... Haven't watched as long as Fleckenstein, of course.

To: SE who wrote (5992)	7/18/2000 12:36:56 PM
From: Patrick Slevin	Read Replies (1) \| Respond to of 7434

Another issue I forgot to mention about the COT, If you consider that report was as of the Close on Friday July 7 or 1494.70 then the Large Hedgers were down as much as 39 SP0U points as of yesterday's High. Certainly far more when you consider their Short was built up over a period of several weeks at least. I do not know about you, but I would not wish to sustain such a drawdown. Fleckenstein is more long term oriented, evidently. But that should illustrate that the reason they are Short Futures is merely to arb a Long position in Cash.