Day-trading the trend in the E-Mini S&P

COT Data

Commercial Net Tracker instructions: This form tracks the Commitment of Traders (COT) data for the commodity futures market. This form "looks" at the most recent five weeks of COT data and provides visual indications of the data. A) If the current value is at a 12-month low, the cell will display a red/burgundy background. B) If the current value is at a 12-month high, the cell will display a green background. C) If the current value went from net negative to net positive, the cell will display a blue background (indicating a bullish condition). D) If the current value is both a 12-month high and also went from a net negative to a net positive, the background will be green. You should view the data with green backgrounds to determine if they also went from net negative to net positive.

If you need help understanding how to understand how to use the COT report to your benefit, please email me at Gary@crbtrader.com and put COT report in the subject line. Please include your name and telephone number in the email.

Proceed to Page 3 for this week's detailed fundementals charts...

Fundamentals

The S&P 500 Index strengthened further to a six-month high after the Fed extended its forecast for keeping interest rates at record lows until at least late-2014 as Fed Chairman Bernanke said the Fed aims to support a "stronger" recovery. Other bullish factors include:

1. Optimism Greece and its creditors will resolve their differences in debt-swap talks aimed at reducing Greece’s debt burden.
2. Reduced concern the European debt crisis will curb global growth after ECB Executive Board member Gonzalez-Paramo said there are “good signs” in the markets that suggest the slowdown in the real economy is “just temporary.”
3. A solid start to Q4 earnings season as 68% of the 146 companies in the S&P 500 that have reported earnings results since Jan. 9 have beaten per-share earnings estimates.

Bearish factors include:

1. The unexpected decline in December U.S. new home sales (-2.2% to 307,000), which left 2011 as the worst year on record for U.S. home sales as builders sold just 302,000 homes, down -6.2% y/y and the worst year for the industry since records began in 1963.
2. The Fed's cut in its 2012 U.S. growth forecast to 2.2-2.7% from a November forecast of 2.5-2.9%.

Fundamental outlook — Bullish — Stock prices remain bullish on optimism that the U.S. economy will withstand the negative effects of the European debt crisis, the Fed’s extension of its outlook for low rates until late-2014, and decent Q4 earnings. Threats to stock prices continue to include the European debt crisis, a slowdown in China’s growth and Europe’s impending embargo on Iranian oil. Other supportive factors include strong earnings, low interest rates, and reasonable valuation levels with the low forward P/E of 12.6 (vs the five-year average of 14.9 and 10-year average of 16.7).

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