According to last week's Commitment of Traders report (COT) Commercial Hedgers, more commonly known as the ‘Smart Money’ hold extreme exposure as they continue buying the Dow. They’re currently holding approximately $42 billion in equity futures, and have been for over a month.
The timing of the Smart Money’s extreme bullish exposure also collaborates nicely from a technical standpoint. Yesterday prices respected channel support (A) at (1) which led to a 1.90% gain today at the time of writing this article. Next hurdle is trendline resistance and 23.6 fib retracement at (2) taken from the highs on the 8th June 2020 and the lows of 26 June 2020.
Above twin resistance at (2) could provide a buying opportunity for the short to medium term (3 to 12 weeks), alternatively, if resistance holds and we break below channel support (A) we can perhaps expect to see prices slide to support at 24730s followed by 24320s in extension for the short term.
Smart Money Hedgers also have near-record exposure in Corn and the Dollar.
Nothing I like more than a nice bounce off rising channel support. As of this week close, the 20 and 200 dmas are just above current price; if those are both broken, a ton of forced buying\short covering may follow, proving your analysys and the smart money's committment 100% right.
rapidrunners
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@Luke8111, I guess we shall see. The only downside to following the smart money is that the data is published on a Friday covering positions held from the Tuesday of that week (COT Report). So in other words, positions held amongst the big players could change, and we would only get to know about it days later..
javivi
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It broke the resistance. Do you think it will touch the upper line of the channel in the short term?? I think so, but all the fundamentals tell the opposite.
rapidrunners
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@javivi, Sorry for the late reply. It's hard to say especially for the short term. The overall uncertainty atm is obviously a concern, which is why forecasting short term moves are tricky. Long term, on the other hand, I would say higher prices are on the cards.