Due to high demand from our recent post on the Commitment of Traders report, we will begin regularly publishing our data and opinions on the most recent COT reports as they become available from the CFTC.
The latest data from the CFTC shows that small speculators remain overwhelmingly bearish on the markets. The latest net bearish position has only been greater at one point all year – the week of the March 8th bottom. Although this data should not be viewed as an imperfect indicator, it has proven to be prescient this year if used as a contrarian indicator. Small speculators have been wrong about the market for the majority of the year and with a new low reading you have to wonder if sentiment isn’t too bearish again. This could prove particularly bullish when you consider the fact that we believe another quarter of “beat and raise” earnings are just around the corner. Short this market at your own risk….
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.