COT Speculator Extremes: Bitcoin, Soybean Meal, Gold & WTI Crude lead Bullish & Bearish Positions

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 Tuesday September 27th.

This week’s extreme COT data feels generally representative of where the market environment is at the current moment. Our COT data showed that there were just four markets with extreme bullish positioning (strength scores over 80 percent) in the over 50+ markets we watch each week and calculate strength scores for.

On the other hand, there were eighteen markets with extreme bearish positioning or strength scores under 20 percent.

For the bullish extreme markets, one was Bitcoin, one was a soft commodity, one was a stock market and one was a currency.

In the bearish extremes, five were in the metals category, two were in energy, two were in stocks, three were in currencies, one was in the soft commodities and five were in bonds markets.

Extreme Positioning Notes:

The 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. We use over 80 percent as extremely bullish and under 20 percent as extremely bearish. (Compare Strength Index scores across all markets in the cot leaders table or read more about speculators).

Here Are This Week’s Most Bullish Speculator Positions:

Bitcoin

The Bitcoin speculator’s futures position comes in as the most bullish extreme standing this week. The Bitcoin speculator level is currently at a 95 percent score of its 3-year range.

The speculator position totaled 1,024 net contracts this week which was a gain by 447 contracts from last week.

Bitcoin is an interesting case as the speculator position remains very small compared to most other markets. The overall open interest levels (contracts open in the market) are also small but have been gaining steadily over the past few years since the introduction of Bitcoin futures. The speculative position in this market signals that there are buyers currently betting on a rebound of the Bitcoin price.

Soybean Meal

Soybean Meal comes in second place this week in the COT Extreme positions after leading last week. The Soybean Meal strength score is 91.5 percent of its 3-Year range currently.

The speculator net position fell by -11,395 contracts this week to a total of 115,075 net contracts. The futures price for Soybean Meal did not follow the extreme position higher this week and finished the week lower by over -4 percent.

Nikkei 225

The Nikkei 225 speculator trader’s futures position comes in third in the extreme standings this week. The Nikkei 225 speculator level is now at a 85 percent score of its 3-year range.

The speculator net position totaled 1,520 contracts this week with a rise of 6,161 contracts from last week. This is first time that the position has been positive in twelve weeks and this week’s extreme position shows that a bullish position has been a rare occurrence in this market over the past three years.

Brazilian Real

The Brazilian Real speculator’s futures position comes in fourth this week in the extreme standings. The BRL speculator level resides at a 84 percent score of its 3-year range. Speculator strength levels have come back strong after a sharp drop early in the COVID pandemic although the exchange rates have not recovered to the same levels. Currently, speculator positioning is once again high as speculator’s could be betting on the higher Brazilian interest rates (currently over 12 percent), higher commodity prices or possibly positioning for a new president and policies.

This Week’s Most Bearish Speculator Positions:

Gold

The Gold speculator’s futures position comes in as the most bearish extreme standing this week. The Gold speculator level is at a 0 percent score of its 3-year range as the speculator net position fell to a total of 52,081 net contracts this week, marking a multi-year low. The Gold price is down by approximately 20 percent since hitting a recent high in March.

WTI Crude Oil

The WTI Crude Oil speculator’s futures position comes in next for the most bearish extreme standing on the week. The WTI Crude speculator level is at just a 4 percent score of its 3-year range.

The speculator net position was a total of 226,080 contracts this week which was a decline by -13,798 contracts from last week. This week marks the 13th straight week that WTI contracts have been in a bearish extreme position.

Platinum

The Platinum speculator trader’s futures position comes in as third most bearish extreme standing of the week. The Platinum speculator level resides at just a 9 percent score of its 3-year range. Platinum prices have retreated over the past year after racing to multi-year highs of over $1,345.00 in February of 2021. All the metals markets we cover have seen similar trajectories with cooling prices as metals have faced a difficult investing environment with a strong dollar and rising interest rates.

Mexican Peso

The Mexican Peso speculator’s futures position comes in as this week’s fourth most bearish extreme standing. The MXN speculator level is at a 10 percent score of its 3-year range. The speculator net position totaled -41,322 contracts this week and a sharp fall by -13,289 contracts from last week. The peso price has held up relatively well and been very stable against the US dollar in the past year despite its weak speculator sentiment. The peso exchange rate has fluctuated in a relatively tight band between 0.0450 and 0.0515 since recovering from its pandemic lows.

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*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.