Who is buying the pullback in stocks?

The Commitments of Traders report for Feb. 20 (released Feb. 23, 2007) showed a the “smart money” commercials holding preponderance of short contracts compared to their long positions. This pattern was very similar to the one that signaled the March 2000 market top. This signal got a prompt reaction as Tuesday, Feb. 27 was big down day. Conveniently, trader positions for the next CoT report were tallied on Tuesday’s close–convenient because if provided a glimpse of the trader reactions to the downturn.

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