Friday, August 1, 2008

Bear market COT's

One of the things that characterized the last bear market was a persistently net short COT in the S&P futures. The commercials have been net short for three weeks now. I'm starting to think we are going to see the same action this time.

We also likely have a very left translated 4 year cycle. The last cycle that topped out in such a short time span was the 1930 cycle. The following two years took the market down into the most vicious bear market in US history.

Granted I doubt we are going into the depths of a deflationary depression like we saw in the 30's. But a 4 year cycle that tops out this quickly is anything but good.