• Stock indexes test lows and bounce
• Commercials cover their shorts and go long
• Trends turn down

Stock indexes tested the previous week’s lows and then closed higher last week. The commitment of traders report showed that the commercials have covered their large short position and gone net long a significant amount. It is unusual to see them change their perspective so quickly. It does not change my outlook for lower prices through mid to late May, but it does temper the amount of down side that I am expecting.

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Posted by Michael Chapman at 3:59 AM PDT