Tough week in the markets as we generally got continuation where we were looking for rebounds. This led to a a pair of losers in gold and the Canadian Dollar against a winning trade in the stock indices due to their rebound.
We began the week looking at the large imbalance of positions between the small speculator shorts and the commercial longs in the gold futures for TraderPlanet. Typically, this is highly indicative of a market nearing exhaustion. Obviously, last Thursday’s meager attempt at a reversal has not held and we find ourselves battling continuation rather than mean reversion reversal. Therefore, I’m anxious to process this week’s Commitment of Traders Report to see how this imbalance has changed over the last week. We’ll update accordingly.
Tuesday, Equities.com published our Canadian dollar analysis. we noted that commercial traders had been buyers in seven straight weeks and suggested that the third time could be the charm as the market attempted and failed to bottom and base in both November and February. We also noted that the commercial trader net position is reaching rarefied air. To that end, it will be interesting to see how the market’s participants reacted to the new lows made this week.
Finally, for our main piece, we updated our research into the S&P 500 stock index futures’ expiration behavior and forecasting ability. We’ve commented on some very specific behavior in the past and this pattern has remained both reliable and, repeatable. We’ve had ten observations with predictable results in the last 16 quarterly expirations.
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