I am a few lines to bring timely evidence that shows how the stock indices are in a sideways movement and in such situation the best tactic is to wait for further clarifications. We could probably expect a small further upward movement before a substantial summer retracement that would then provide an excellent entry to proceed towards the end of the year. I would probably expect a minimum for August and therefore from today onwards I expect limited movements both upwards and downwards, to then see a correction in July and the minimum in August. This is plan A that will therefore have to be verified daily going forward.
To bring evidence of what I am saying, am attaching the COT charts for Sp500, Nasdaq and Nikkei with the explanation below:
sp500 COT
this is the most interesting chart because the Large Traders, or the large financial institutions (in green) have been net short on this future since April and on these increases of the last few weeks they have significantly increased their short exposure, a sign that they are preparing for a retracement. We remind you that these are deductions and that although the retracement is the most likely outcome, it is possible that even the Large Traders are wrong and that they will perhaps be forced to close the shorts creating instead a powerful short-squeeze.
As often happens, the Small Speculators (in blue) are instead on the rise. So the Large are selling short, and they are selling to the Small who are buying their contracts and are often the ones who lose in trading.
Nasdaq COT
Compared to the Sp500 here the Large Traders are still bullish on the technology index, but they have significantly reduced their exposure.
The reduction of the long exposure of the Large Traders goes hand in hand with the increase in short exposure of the Small Speculators. Here the two players are in line.
NIKKEI COT
I show the Nikkei COT because here the Large Traders are very precise and more reliable, as you can see for yourself in the period September 2024-April 2025.
At the moment the Japanese Large Traders are not short and are steadily bullish.
CONCLUSION:
Looking at the COT we can deduce that the situation is apparently calm but that under the surface the important players are already positioning themselves for the near future, if not for a retracement, they are at least positioning themselves to reassess the situation and be able to enter only after the situation in general has cleared up. Here is the evidence of the sideways of the indices and the reason why me too am waiting for greater clarity.
