Last week the S&P 500 was all about jobs, jobs and jobs. On Wednesday ADP released their numbers for April at 119,000, below expectations and dropping the S&P 15 points. Thursday’s Jobless Claims were reported at a five-year low, and the S&P rises 15. On Friday the U.S. government employment number was reported at 165,000, which was 15,000 higher than expected sending the S&P up 16.5 and above 1600. It was an interesting report as March was revised up from 88,000 to 158,000 and February was revised from 268,000 to more than 320,000. Not sure how or why these revisions were so high, but has anyone ever seen employment numbers revised down? Price action last week had the June E-mini S&P 500 open at 1576.25 and close the week at 1608.50, a nice $1,612.50 per contract move if you were long.
Proceed to Page 2 for the latest COT Data...
On the weekly chart we see the strong uptrend intact. And big money has done their part on making sure of that. Looking at the Traders in Financial Futures COT, this past week we saw Dealer/Intermediary add to net shorts now at -719,244 contracts, Lev Funds actually dropped net shorts to -227,194 contracts and Asset Managers dropped net longs to 899,922 contracts. Remember these are net positions meaning the difference between these groups’ total longs and shorts. Definitely not small numbers.
You may wonder where all this money comes from for these institutions to trade these markets like they do. You need to look no further than the $85 billion the Fed is printing each month. And if you are wondering who the Dealer Intermediary group represents, think too-big-to-fail banks like JPMorgan, BofA, Citibank and Goldman Sachs. If you trade futures, forex, ETFs or options, then tracking how big money as a group moves through these markets in imperative to your success as a trader. So watch closely as these institutions will give you a sign when a large correction is coming.
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...
On the daily chart below, you can see the last trade recommended by TrendTrader and where open trade equity is as of this past Friday’s close. Note that ADX is now above 44 so this is a strong trending market. DI Diff is well over 5.00 at 18.26. MACD is bullish adding divergence from above the signal line and Stochastics have entered deep overbought territory. Watching closely that the market does not get back below 1600. I am waiting for at least a 100+ point correction down. That move will be clearly marked on the weekly chart when it starts.
Click to enlarge.
Have a prosperous trading week.
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