SPY , Maybe watch for a contrarian entry using YOUR edge .
The vast majority of smart money and retail money is massively short SPY in futures and equities . Additionally, the same applies for Dow Jones and russell , where the same positioning theme , looking at COT data applies . Nasdaq , for me, still supports more move up but positioning is slightly different , will go into detail on positioning below :
The general theme with COT data is that you have commercial hedgers , smart money , and dumb money. Usually the legacy data says , commercial , reportables , and non reportables but there is variance on the terms depending where you see them . There are way more detailed versions too with additional labels. The simplified version I have been using with only the three categories, is my favorite at this time.
The way I use it , along with IG trader positions data , is to look for a contrarians entry/theme and that potentially helps me to identify extra opportunities using my primary edge still as a separate component . The COT data is based on futures contracts and the IG trader data is based on actual positions in the markets provided by that broker , who tracks its clients .
So , now to the point , SPY is probably a long here ,because the smart money and dumb money are both considerably short . Commercials are hedged long .The index is net short per IG traders positions at 70% short .
Russel and Dow Jones are very similar , Nasdaq is independently long per smart money but still short per dumb money . Dumb money or non reportable is the group most of us belong in btw , we for the most part are the worst traders in the world for the duration of the stock markets existence . Whereas Smart money, or reportables, are the big players like hedge funds etc. They usually make more money in markets than retail but are still human . Being human we often tend to get the market direction wrong.
So that being said, almost every one (except commercial hedgers) are betting down for SPY, NASDAQ, RUSSELL and DOW JONES (With the small exception that reportables just switched over to long on NASDAQ recently but retail still short ).
Personally, since everyone seems to be short the major indices ( except commercials ), I think that this is a very bad short because there are just way to many traders betting on that side including the worst ones , retail ( statistically speaking ) .
Disclaimer , follow your edge here , this data is not a signal on its own more of an observance of conditions from a contrarian perspective trader. But I think it can be helpful to many different types of market participants .
I will be personally watching for a significant shift in the COT and IG data and in the meantime, I am hoping that it actually acts to fuel more of a move up , once the data changes , I will try to remember to update this idea too .
The general theme with COT data is that you have commercial hedgers , smart money , and dumb money. Usually the legacy data says , commercial , reportables , and non reportables but there is variance on the terms depending where you see them . There are way more detailed versions too with additional labels. The simplified version I have been using with only the three categories, is my favorite at this time.
The way I use it , along with IG trader positions data , is to look for a contrarians entry/theme and that potentially helps me to identify extra opportunities using my primary edge still as a separate component . The COT data is based on futures contracts and the IG trader data is based on actual positions in the markets provided by that broker , who tracks its clients .
So , now to the point , SPY is probably a long here ,because the smart money and dumb money are both considerably short . Commercials are hedged long .The index is net short per IG traders positions at 70% short .
Russel and Dow Jones are very similar , Nasdaq is independently long per smart money but still short per dumb money . Dumb money or non reportable is the group most of us belong in btw , we for the most part are the worst traders in the world for the duration of the stock markets existence . Whereas Smart money, or reportables, are the big players like hedge funds etc. They usually make more money in markets than retail but are still human . Being human we often tend to get the market direction wrong.
So that being said, almost every one (except commercial hedgers) are betting down for SPY, NASDAQ, RUSSELL and DOW JONES (With the small exception that reportables just switched over to long on NASDAQ recently but retail still short ).
Personally, since everyone seems to be short the major indices ( except commercials ), I think that this is a very bad short because there are just way to many traders betting on that side including the worst ones , retail ( statistically speaking ) .
Disclaimer , follow your edge here , this data is not a signal on its own more of an observance of conditions from a contrarian perspective trader. But I think it can be helpful to many different types of market participants .
I will be personally watching for a significant shift in the COT and IG data and in the meantime, I am hoping that it actually acts to fuel more of a move up , once the data changes , I will try to remember to update this idea too .
Comment:
Also , just want to add that these armies of market participants could be correct but my logic is that since everyone seems to be thinking the same thing , what if they end up being wrong ? and if they are is that not a great long entry ? And seeing as how they have been mostly losing on this short bet since November 2022 , do you think they are going to be right this time finally or will the trend continue ....
艾力克~