Since highs of late July/early August the YM is divergent against the TF, NQ, and ES. The DOW made a 61% correction while the ES and NQ made roughly a 78% correction, and the TF actually retested its’ early July lows. There is a potential upside opportunity on the TF if the market is on the way back up. Also, on the contrary, there may be a bearish opportunity with the YM if the market continues down. (click on the accompanying picture to see detail)
Looking at the Commitment of Traders Index (COT) released on Friday, the Nasdaq has a strong bullish set up with commercials with close to the most long net they have been in 6 months (the smart money) and large and small traders the most net short they have been in 6 months (the dumb money), this presents an interesting contrarian long opportunity for traders following the commercials and fading the large and small traders. In the ES the COT is mildly bullish, and the DJIA is more neutral.
Click images to enlarge
Parenthetically, oil has also retested its’ lows from July while gold has made a 78% comeback in the same timeframe. So oil also may see a proportionately bigger move if the market revives its’ upward bias.
