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| THE
SITE OF TECHNICAL MARKET INDICATORS |
| Trend
Trader Info |
| The
trend is your friend! Following the trend is a proven way to beat the
market and make money. There are many ways to identify a stock market
trend and a good method are simple moving averages. We use 10-week moving
averages of the weekly highs and lows and a 5-week moving average of the
closing price. An uptrend is in force as long as the weekly closing price
trades above the 10-week moving average of highs and the 5-week moving
average trades above the 10-week moving average of highs. The reverse
is true in a downtrend. We use mainly Exchange Traded Funds (ETFs) as
the basis for our sector analysis. |
Watch
out for an explosion in this market sector! |
| (May 15th) The price of this ETF has been in a vicious downtrend since July 2008, but broke out last week and closed above its 10-week moving average of weekly highs (red arrow). Commercial hedgers (smart money) of this underlying futures contract have the lowest short positions in this market since we follow this indicator (explanation and chart below). A bull market in this market sector and its related stocks is therefore most likely. |
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| The Commodity Futures Trading Commission (CFTC) provides inside information about purchases and sales of futures contracts. The largest players in each market are required to disclose their positions to the CFTC on a daily basis and this report is released weekly on Friday afternoon (the reporting requirement varies by commodity). These traders are separated into Commercial Hedgers and Large Speculators. The positions of Small Traders are calculated by subtracting the total of contracts held by the reporting groups from all the contracts outstanding (small traders are not required to report their positions). Commercial hedgers hold a significant informational edge over other traders as far as fundamental supply-and-demand statistics are concerned. They tend to be early, but they are usually right on the long run, quite contrary to the small traders. Extreme divergences in long and short positions of small traders, large speculators and commercial hedgers have proven to be reliable indicators of important trend changes. In such cases it is not advisable to bet against the commercial hedgers. Commercial hedgers (smart money) of this underlying futures contract have the lowest short positions in this market since we follow this indicator which is extremely bullish. |
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