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Brutal week. Will it hold here? Did commodities find a floor? It's interesting how banks and the Russell 2000 have held up better than the other indexes, but what does it all mean? The impassive mountain that is the Commitments of Traders data seems to just smile at it all. I've just posted my latest signals update (see the table linked at this page) based on this afternoon's trader positioning, as revealed by the U.S. Commodity Futures Trading Commission.

Only one new signal this week: my trading setup for the BKX U.S. Bank Indexthree-month Eurodollar contract (an interest-rate proxy for global liquidity). When the large specs get very bullish in their net percentage-of-open-interest position, I go long. When they get very bearish, I go short. The signal has been bullish since the week of July 1 (with the entry on July 14), which was pretty much at that hellacious lowpoint of the summer. The fact that it's now going bearish - when technically, the market looks like it might be finding support at the July low - is really not a good sign. No, not at all. Recall, also, that my 10-year Treasury setup went bearish last week, with an execution date of Sept. 29. Something's not right.
Election '08 Watch: The Stock Trader's Almanac people, incidentally, say that September is not only the weakest month historically, but that a weak September and October typically occur when the incumbent party loses the White House in an election year. A bullish November tends to ensue. Perhaps, at least, Osama (oops, Obama; did I really say that?!) is smiling. With BKX bearish, that makes three of my six equities short, while two are long and one is in cash. I know, I know, this isn't very scientific, but it looks like the derivatives market at this point is giving Obama a slight edge.