Speculator Extremes: New Zealand Dollar, Euro & CAD lead 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 December 17th.

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:

Lean Hogs

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

The six-week trend for the percent strength score totaled 17.0 this week. The overall net speculator position was a total of 93,410 net contracts this week with a rise of 1,888 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.

Live Cattle

The Live Cattle speculator position comes next in the extreme standings this week. The Live Cattle speculator level is now at a 98.4 percent score of its 3-year range.

The six-week trend for the percent strength score was 34.5 this week. The speculator position registered 110,778 net contracts this week with a weekly gain by 8,077 contracts in speculator bets.

Nasdaq

The Nasdaq speculator position comes in third this week in the extreme standings. The Nasdaq speculator level resides at a 95.1 percent score of its 3-year range.

The six-week trend for the speculator strength score came in at 31.0 this week. The overall speculator position was 36,082 net contracts this week with an increase by 509 contracts in the weekly speculator bets.

Ultra U.S. Treasury Bonds

The Ultra U.S. Treasury Bonds speculator position comes up number four in the extreme standings this week. The Ultra U.S. Treasury Bonds speculator level is at a 90.6 percent score of its 3-year range.

The six-week trend for the speculator strength score totaled a change of 17.2 this week. The overall speculator position was -219,304 net contracts this week with a change of -2,932 contracts in the speculator bets.

Coffee

The Coffee speculator position rounds out the top five in this week’s bullish extreme standings. The Coffee speculator level sits at a 86.5 percent score of its 3-year range. The six-week trend for the speculator strength score was -0.8 this week.

The speculator position was 62,147 net contracts this week with an edge higher by 73 contracts in the weekly speculator bets.

This Week’s Most Bearish Speculator Positions:

New Zealand Dollar

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

The six-week trend for the speculator strength score was -46.8 this week. The overall speculator position was -42,507 net contracts this week with a drop by -14,300 contracts in the speculator bets.

Euro

The Euro speculator position comes in next for the most bearish extreme standing on the week. The Euro speculator level is at a 3.7 percent score of its 3-year range.

The six-week trend for the speculator strength score was -16.8 this week. The speculator position was -65,895 net contracts this week with a rise of 9,678 contracts in the weekly speculator bets.

Canadian Dollar

The Canadian Dollar speculator position comes in as third most bearish extreme standing of the week. The Canadian Dollar speculator level resides at a 6.4 percent score of its 3-year range.

The six-week trend for the speculator strength score was -3.1 this week. The overall speculator position was -182,055 net contracts this week with a dip of -501 contracts in the speculator bets.

Soybean Meal

The Soybean Meal speculator position comes in as this week’s fourth most bearish extreme standing. The Soybean Meal speculator level is at a 9.0 percent score of its 3-year range.

The six-week trend for the speculator strength score was -24.3 this week. The speculator position was -44,844 net contracts this week with a decline by -15,616 contracts in the weekly speculator bets.

5-Year Bond

Finally, the 5-Year Bond speculator position comes in as the fifth most bearish extreme standing for this week. The 5-Year Bond speculator level is at a 11.7 percent score of its 3-year range.

The six-week trend for the speculator strength score was 0.3 this week. The speculator position was -1,762,317 net contracts this week with a rise of 28,113 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.