By InvestMacro
The latest update for the weekly Commitment of Traders (COT) report was released by the Commodity Futures Trading Commission (CFTC) on Friday for data ending on September 20th.
This weekly Extreme Positions report highlights the Top Most Bullish and Top Most Bearish Positions for the speculator category. Extreme positioning in these markets can foreshadow strong moves in the underlying market.
To signify an extreme position, we use the Strength Index (also known as the COT Index) of each instrument, a common method of measuring COT data. The Strength Index is simply a comparison of current trader positions against the range of positions over the previous 3 years using a range from 0 to 100. We use over 80 percent as extremely bullish and under 20 percent as extremely bearish. You can compare Strength Index scores across all markets in the data tables or cot leaders table.
Speculators, classified as non-commercial traders by the CFTC, are made up of large commodity funds, hedge funds and other significant for-profit participants. The Specs are generally regarded as trend-followers in their behavior towards price action – net speculator bets and prices tend to go in the same directions. These traders often look to buy when prices are rising and sell when prices are falling. To illustrate this point, many times speculator contracts can be found at their most extremes (bullish or bearish) when prices are also close to their highest or lowest levels.
These extreme levels can be dangerous for the large speculators as the trade is most crowded, there is less trading ammunition still sitting on the sidelines to push the trend further and prices have moved a significant distance. When the trend becomes exhausted, some speculators take profits while others look to also exit positions when prices fail to continue in the same direction. This process usually plays out over many months to years and can ultimately create a reverse effect where prices start to fall and speculators start a process of selling when prices are falling.
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Soybean Meal comes in at the most bullish extreme standing this week as speculator bets have been on a strong rise in this market. The Soybean Meal speculator level is currently right near the top of its 3-year range with at a 97.9 percent score.
Overall, the Soybean Meal position of +126,470 net speculator contracts is the most bullish position of the past twenty-six weeks.
The Bitcoin speculator trader’s futures position comes in as the second most bullish extreme standing this week. The Bitcoin speculator level is currently at a 87 percent score of its 3-year range.
The speculator position totaled 577 net contracts this week which was a change by 451 contracts from last week.
The Brazil Real speculator trader’s futures position comes next in the extreme standings this week as traders have been adding to their bullish positioning in recent weeks. The BRL speculator level is now at an 82 percent score of its 3-year range.
The speculator position was 32,369 net contracts this week and saw a small dip by -584 contracts from last week. The speculator gross long position was a total of 41,979 contracts versus the total speculator gross short position of 9,610 contracts.
The Gold speculator trader’s futures position comes in as the most bearish extreme standing this week as traders have been bailing sharply out of their futures positions. The Gold speculator level has fallen to a zero percent score of its 3-year range. This means that speculator sentiment is at its lowest level of the past three years currently.
The speculator position was 65,722 net contracts this week, a weekly drop of -31,622 contracts from last week and the lowest level in the past 178 weeks.
The Russell 2000 Mini stock market is the next up in bearish extreme positioning this week. The Russell 2000 Mini is at just a 7.4 percent score of its 3-year range.
Speculative traders have been increasing their bearish bets for the Russell Mini for three straight weeks and the current net position (-106,838 net contracts) has now fallen to the most bearish level of the past five weeks.
The WTI Crude Oil speculator trader’s futures position comes in next for the most bearish extreme standing on the week. The WTI Crude speculator level is at an 8 percent score out of its 3-year range.
The speculator position was 239,878 net contracts this week which was a change by 12,821 contracts from last week.
The 5-Year Bond speculator trader’s futures position comes in as fourth most bearish extreme standing of the week. The 5-Year speculator level resides at an 11 percent score out of its 3-year range and the overall 5-Year Bond net position has been in a bearish position since April of 2021.
The overall net speculator position was a total of -493,804 net contracts this week and rose by a total of +27,655 contracts from last week.
Article By InvestMacro – Receive our weekly COT Newsletter
*COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) were positioned in the futures markets.
The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators) as well as their open interest (contracts open in the market at time of reporting). See CFTC criteria here.
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