Obviously, the bullish crowd sees the midterm elections as a positive thing, otherwise, the markets would have tanked far sooner. Wild bullish charts like this virtually look vertical on a daily chart, so a correction should be near. If the bigger trend is bearish then a complete retracement of the October bottom will happen. We also have the potential for an H&S top, which the SP500 is running up against. This is a classic textbook retracement move, but we have to see if it’s real!
This is the E-Mini SP500 COT report that shows the commercials having a bearish outlook, while the speculators are in a typical inverse position. Speculators or managed money always seem to get trapped as they are not the smart money crowd that media makes out to be.
On A different note, the pages read on this blog have exploded dramatically in the last 3 days, as over 6000 pages were view in a 24 hour period. I was set-back by these numbers but it may be just due to many people being off work and voting. It’s nice to see these numbers, but only time will tell if it’s not just a freaky one of a kind type of move.
I will not post on Remembrance Day for obvious reasons as I take that day very seriously.
This is the 2-year T-Note crash and is the driver of any rate increase that the Fed may still implement. The Fed may start to pause, or start giving the impression it might slow down in increasing the rates. Higher rates are not designed to take liquidity from the markets, but in the end, that is exactly what is happening. Who wants to jump into real estate when the majority can no longer afford to take out a loan, or their wages can no longer keep up. Slowly squeezing the lifeblood out of the markets has been happening since the 2000 peaks and they start to drop rates once the markets have obviously started to pop!
We can see how the Death Cross on the weekly chart forecast a major decline, and once this chart starts to reverse, then a Golden Cross will happen. This could still take months but it is something to watch for.
Virtually every T-Note related COT report shows that the commercials are extremely bullish and this 2-Year T-Note report shows how bullish they really are. This COT report will change as we head from one extreme and then reverse back to another extreme.
When markets go down, bearish fundamental stories come out. I look at it from a contrary perspective and when I read bearish stories on the British Pound, I quickly flip to the COT reports to see if the COT report supports any of the bearish rhetoric. Take a quick look below and as the commercial traders see a rosy picture, while the speculators follow the crowd and believe the bearish BS! In early 2017 the British Pound hit a major bottom and has since been holding. It sure looks like a wave 2 correction has completed, with the next wave 1-2 also completed.
This is also where I use the 1-2 wave count and since I’m at an Intermediate degree bottom, I can only have 2 lower degree extensions. It might be a bit early for Minor degree wave 1-2 to be completed, but that can be easily adjusted. I’m sure some diagonal wave structures will be thrown in to keep us guessing, but when this bullish phase does something different, it will force a review each and every time.
This is the simple British Pind COT report where the commercials sure are looking bullish to me. Those are net long positions, while the speculators are bearish. Speculators are chasing the perceived trend and always get into a trap. Look into the past and we can see major shifts in positions and I would not look for a bearish wave count until the commercials start to turn net short again, or at least close to it. Are the COT reports classified as “Fundamentals”? With the EWP, all sentiment readings are important as they make charts go up and down.
The mainstream media always quote the speculators like they are the experts, but the commercial hedgers are a different group, as they deal more with people closest to the industry.
To help confirm this bullish trend, then higher highs, and higher lows must form.