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Still holding long according to my trading plan. There is no doubt that the rally was largely short covering and the mo-mo chasers have not entered the market..yet. Nevertheless, it was an orderly rally, with little to no attendant panic. There is an old saying, "Buy the creeper, sell the leaper", and this rally could hardly be characterized as a leaper. The market tested the 50MA on the weekly and held which is positive long term, although the bulls still have their work cut out for themselves, especially with payrolls tomorrow and unenjoyment Friday. Tuesday, however, is the FOMC announcement, which carries a very bullish seasonality with it. For now, I am sticking with my pre-determined profit targets, but I am remaining flexible - ready to bang out of my position if it is warranted, but also ready to pull my offers and add, if that opportunity manifests itself.
COT shows that the shorts consist of large and small specs, while the the longs consist of commercial specs. In other words, smart and dumb money are the same way, but on a relative basis, not extremely short. What it doesn't tell us exactly, is if they are short at good levels or in the hole, and how much pain they are willing to take. Nevertheless, dumb money is short, and will be quick to cover. Large specs are strong hands and can take more pain, but at some point they will pay up also.