<<With the big contract position being so close I would say that they are neutral at best. Since the long and short total is close, I think to base a trade off of the commercials net big contract long position I would a want consider the mini's as well>>
Joe, that makes some sense. Although I did not say that whether the BIG SP commercials are net long or net short means anything in and of itself. They just turned net-long by a small amount. That does not mean one should seriously look at going long the SP. I surely would not do that now. However when the commercials build to a net long of 35,000 to 50,000 contracts (just an example) while public sentiment is very bearish, the ADX is above 40 (or maybe over 60) AND the stochastics (%K AND %D) are both under 20 .... then the SP itself will be about to rally significantly.
The commercials are ALMOST always early, so a drastic change of short to long of minus 60,000 to plus 10,000, by itself, means little other than it is time to watch more closely.
In other words it is not bullish yet, not nearly.
My estimate is we will break below SP 700 before the commercials have completed building their large net-long position ... and then, with public opinion, the ADX and stochastics all lined up .... BIG cyclical RALLY ... but probably still not the end of the bear market.
<<I would have to agree with Mish in that the commercials appear to be net bearish. The divergence between the two does cause one to ponder>>
Of course, the commercials are still bearish ... equities remain in trouble. They have just changed to barely net long, and nothing else is set-up. But they MIGHT be starting to signal a significant rally in the next, I don't know, six months.
The Mini SP commercials are not a consideration to me. When the BIG SP is set-up to rally, the SP will rally.
And my bet right now is that it is months way.
Ken Wilson
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