When The Smart Money Fails by Giorgos E. Siligardos, PhD
Because… Nobody Is Infallible
The Commitments Of Traders aggregated report is a handy tool for watching the moves of the most significant players in the markets. But what happens when the “smart money” fails? You may be able to gain some insights from the reports. Find out how.
The year 2008 was an important year for stock market analysts, not just because it was one more crash to study but also because it debunked the myth of infallibility of some highly regarded market participants. In this article I will first provide a brief, yet comprehensive, overview of the Commitments Of Traders (COT) aggregated report along with its characteristics and the way most analysts use it. Next I will discuss the commercials’ failure to anticipate the crash of 2008 and the lesson to be learned from their fiasco. Finally, I will provide a short overview of the disaggregated and Traders In Financial Futures (TFF) reports introduced a few years ago by the Commodity Futures Trading Commission (CFTC).
Each week, the CFTC, an independent agency created by the US Congress to regulate the US commodity futures and option markets, releases the aggregated COT report to the public from its website, www.cftc.gov.