The latest batch of Commitments of Traders data was released on Friday, and it contained some mixed results. For those not familiar with this information, it provides a snapshot of the futures contracts held by commercial traders (financial institutions) and small traders. The basic interpretation of this data is that you want to be on the same side as commercial traders, since they are generally regarded as the "smart money."
COT Data for the S&P 500
The data for 5/1/01 shows that commercial traders dumped 5% of their S&P 500 short positions, but are still short 41,144 more contracts that they are long. Since this is the least bearish this data has been all year, perhaps the bears are going into hibernation.
COT Data for the Nasdaq-100
The Nasdaq-100 COT data isn't as encouraging. The current net position of commercial traders is at the second lowest level (bearish) of the year for the Nasdaq-100. If every analyst on CNBC believes that technology has bottomed, why are they loading up on short positions? It must be the old mantra, do as I say not as I do. At the same time, small traders, who tend to be on the wrong side of the trade, are loading up on long positions in the Nasdaq-100.