31 Aug

COT Speculator Extremes: Yen, Gold & Brazil Real lead Bullish & Bearish Positions

August 31, 2024

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 August 27th.

This weekly Extreme Positions report highlights the Most Bullish and 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 data table or cot leaders table)

Here Are This Week’s Most Bullish Speculator Positions:

Japanese Yen


The Japanese Yen speculator position comes in as the most bullish extreme standing this week. The Japanese Yen speculator level is currently at a 100.0 percent score of its 3-year range.

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The six-week trend for the percent strength score totaled 84.2 this week. The overall net speculator position was a total of 25,868 net contracts this week with a gain of 2,283 contract in the weekly speculator bets.

Speculators or Non-Commercials Notes:

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.

Gold


The Gold speculator position comes next in the extreme standings this week. The Gold speculator level is now at a 100.0 percent score of its 3-year range.

The six-week trend for the percent strength score was 3.9 this week. The speculator position registered 294,445 net contracts this week with a weekly rise of 3,192 contracts in speculator bets.

Ultra U.S. Treasury Bonds


The Ultra U.S. Treasury Bonds speculator position comes in third this week in the extreme standings. The Ultra U.S. Treasury Bonds speculator level resides at a 98.2 percent score of its 3-year range.

The six-week trend for the speculator strength score came in at 78.7 this week. The overall speculator position was -269,698 net contracts this week with a boost of 55,916 contracts in the weekly speculator bets.

Coffee


The Coffee speculator position comes up number four in the extreme standings this week. The Coffee speculator level is at a 91.1 percent score of its 3-year range.

The six-week trend for the speculator strength score totaled a change of -4.0 this week. The overall speculator position was 66,907 net contracts this week with an increase by 2,749 contracts in the speculator bets.

3-Month Secured Overnight Financing Rate


The 3-Month Secured Overnight Financing Rate speculator position rounds out the top five in this week’s bullish extreme standings. The 3-Month Secured Overnight Financing Rate speculator level sits at a 88.7 percent score of its 3-year range. The six-week trend for the speculator strength score was 34.8 this week.

The speculator position was 550,764 net contracts this week with a jump of 168,911 contracts in the weekly speculator bets.

This Week’s Most Bearish Speculator Positions:

Brazil Real


The Brazil Real speculator position comes in as the most bearish extreme standing this week. The Brazil Real speculator level is at a 1.8 percent score of its 3-year range.

The six-week trend for the speculator strength score was -8.0 this week. The overall speculator position was -52,963 net contracts this week with a decline of -2,008 contracts in the speculator bets.

Soybeans


The Soybeans speculator position comes in next for the most bearish extreme standing on the week. The Soybeans speculator level is at a 3.1 percent score of its 3-year range.

The six-week trend for the speculator strength score was -5.4 this week. The speculator position was -184,266 net contracts this week with a reduction by -5,373 contracts in the weekly speculator bets.

Cotton


The Cotton speculator position comes in as third most bearish extreme standing of the week. The Cotton speculator level resides at a 3.5 percent score of its 3-year range.

The six-week trend f

or the speculator strength score was -6.4 this week. The overall speculator position was -37,075 net contracts this week with a change of 5,753 contracts in the speculator bets.

5-Year Bond


The 5-Year Bond speculator position comes in as this week’s fourth most bearish extreme standing. The 5-Year Bond speculator level is at a 4.7 percent score of its 3-year range.

The six-week trend for the speculator strength score was -4.7 this week. The speculator position was -1,656,257 net contracts this week with an improvement by 80,553 contracts in the weekly speculator bets.

10-Year Note


Finally, the 10-Year Note speculator position comes in as the fifth most bearish extreme standing for this week. The 10-Year Note speculator level is at a 10.1 percent score of its 3-year range.

The six-week trend for the speculator strength score was -22.7 this week. The speculator position was -914,437 net contracts this week with a change of 123,675 contracts in the weekly speculator bets.

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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