Last week the March 2013 Dow opened at 13,432 and closed the week at 13,576. On the daily chart we see ADX at 37.7 and rising reflecting a strong trend, MACD is bullish and Stochastics are in deep overbought territory. Taking a good look at the daily chart, think about where the Dow might be trading today if there had been no fear of the fiscal cliff.
Proceed to Page 2 for the latest COT Data...
COT Data
Looking at the weekly chart we see the price action bumping into weekly resistance of 13,600. You can see the last time this number was hit was early September 2012. Look at what happened with the Dealer/Intermediary under the Traders in Financial Futures COT report net shorts and Leveraged Funds net longs. See the drop take place from 13,600 to 12,600 in little over two-months. On the weekly chart you see that ADX is at 52, very strong trend and weekly Stochastics are in deep overbought territory.
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...
Fundamentals
On the monthly chart notice how since 2008 the longest consecutive drop in the Dow was the five months between May 2011 and September 2011, opening in May at 12,787 and closing in September at 10,841. Look at October 2007 and the high hit at 14,267. Will we see this happen again, and if so then what? Well looking back at the weekly chart, take a good look at the Traders in Financial Futures. This past week Dealer/Intermediary came in net short -37,228 contracts, Asset Managers were net long 12,313 contracts and Leveraged Funds were net long 16,888. If we see increases in net shorts and net longs, there is a solid chance of 14,000 and beyond. If liquidation occurs, watch for a drop. If we see a break above 13,600 and the market stays above this area, there is good reason to believe 14,267 could be here soon.
Have a prosperous week.
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