Last week the March 2012 Dow mini opened at 12,959 and closed the week at 12,968 showing no weekly momentum. The weekly high came in at 13,042. The uncertainty in the market is highlighted by the doji candle formation.
On the daily chart below we see ADX dropping, now at 22, and showing a weak trend is now in place. The market could be range bound with the top of the range at 13,000, first bottom at 12,800 and second bottom at 12,600. Today we see –DI crossing up over +DI. MACD today is moving down away from the signal line, and Stochastics are correcting down out of overbought territory. This is what we call a TTS at Trends in Futures.
Proceed to Page 2 for the latest COT Data...
You can see a different picture on the weekly chart below, as ADX is at 66 showing a strong trend up. Weekly Stochastics shows the market in deep overbought territory, and yes even in the Dow the COY shows how “big money” moves the market. Just look at the movement of Commercial net shorts and Large Spec net longs. See how the weekly price action moves, interesting isn’t it? As of last week Commercials are net short -34,175 contracts and Large Specs are net long 30,928 contracts.
And just for fun look at the monthly chart. See the monthly price action in March and April 2011. Now look at May 2011, this is when the drop of 2011 started, bottoming out in September 2011 at 10,500. Could 2012 look the same? It is possible, especially if the coming correction turns into a trend change. Have a prosperous trading week.
If you need help understanding how to understand how to use the NEW COT report to your benefit get instant access to my new e-book "What Lies Beneath ALL Trends". It is filled with eye opening information.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.
Proceed to Page 3 for this week's detailed fundementals...
The absence of any major US economic reports last Friday helped turn the market's focus to last week's developments: Better than expected Q4 GDP, surprise jump in consumer confidence and last week's ECB funding operation. Some traders expressed concern that the 2012 rally could be vulnerable for a near-term setback. Energy-related shares were the laggards on Friday’s session, dragged down by a more than 2.0% slide in crude oil prices. A rally in the US dollar also was seen as a force that pressured industrial and material-related shares.
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