11 Aug

Speculator Extremes: Japanese Yen, Natural Gas & Silver lead Bullish Positions

August 11, 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 6th.

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 as a volatility spike helped turnaround this currency. 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 94.0 this week. The overall net speculator position was a total of -11,354 net contracts this week with a huge gain of 62,106 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.

Natural Gas


The Natural Gas speculator position comes next in the extreme standings this week. The Natural Gas speculator level is now at a 88.0 percent score of its 3-year range.

The six-week trend for the percent strength score was 17.6 this week. The speculator position registered -66,340 net contracts this week with a weekly rise of 16,797 contracts in speculator bets.

Silver


The Silver speculator position comes in third this week in the extreme standings. The Silver speculator level resides at a 83.8 percent score of its 3-year range.

The six-week trend for the speculator strength score came in at -9.3 this week. The overall speculator position was 49,081 net contracts this week with an edge higher by 20 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 83.6 percent score of its 3-year range.

The six-week trend for the speculator strength score totaled a change of -11.2 this week. The overall speculator position was 59,207 net contracts this week with a dip of -3,809 contracts in the speculator bets.

Russell 2000 Mini


The Russell 2000 Mini speculator position rounds out the top five in this week’s bullish extreme standings. The Russell 2000 Mini speculator level sits at a 83.3 percent score of its 3-year range. The six-week trend for the speculator strength score was 33.6 this week.

The speculator position was -2,595 net contracts this week with a boost of 31,390 contracts in the weekly speculator bets.

This Week’s Most Bearish Speculator Positions:

5-Year Bond


The 5-Year Bond speculator position comes in as the most bearish extreme standing this week. The 5-Year Bond speculator level is at a 0.0 percent score of its 3-year range.

The six-week trend for the speculator strength score was -11.3 this week. The overall speculator position was -1,688,076 net contracts this week with a drop of -32,038 contracts in the speculator bets.

Brazil Real


The Brazil Real speculator position comes in next for the most bearish extreme standing on the week. The Brazil Real speculator level is at a 0.0 percent score of its 3-year range.

The six-week trend for the speculator strength score was -30.9 this week. The speculator position was -54,883 net contracts this week with a decrease of -13,724 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 0.0 percent score of its 3-year range.

The six-week trend for the speculator strength score was -11.0 this week. The overall speculator position was -41,908 net contracts this week with a decline of -4,567 contracts in the speculator bets.

Gasoline


The Gasoline speculator position comes in as this week’s fourth most bearish extreme standing. The Gasoline speculator level is at a 0.0 percent score of its 3-year range.

The six-week trend for the speculator strength score was -41.4 this week. The speculator position was 11,587 net contracts this week with a drop of -11,469 contracts in the weekly speculator bets.

Palladium


Finally, the Palladium speculator position comes in as the fifth most bearish extreme standing for this week. The Palladium speculator level is at a 4.4 percent score of its 3-year range.

The six-week trend for the speculator strength score was -2.2 this week. The speculator position was -13,244 net contracts this week with an edge lower by -153 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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