Speculator Extremes: EAFE, Lean Hogs & Silver lead weekly Bullish 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 June 24th.

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:

MSCI EAFE MINI

The MSCI EAFE MINI speculator position comes in as the most bullish extreme standing this week as the MSCI EAFE-Mini speculator level is at a 99.5 percent score of its 3-year range.

The six-week trend for the percent strength score was a gain of 6 points this week. The speculator position registered 7,260 net contracts this week with a weekly gain of 5,223 contracts in 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.

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 99 percent score or just below its maximum of the 3-year range.

The six-week trend for the percent strength score totaled a rise by 36 points this week. The overall net speculator position was a total of 94,956 net contracts this week although saw a dip by -1,312 contract in the weekly speculator bets.

Silver

The Silver speculator position comes up number three in the extreme standings this week. The Silver speculator level is at a 95 percent score of its 3-year range.

The six-week trend for the speculator strength score totaled a change of 19 points this week. The overall speculator position was 62,947 net contracts this week with a reduction by -4,227 contracts in the speculator bets.

Ultra U.S. Treasury Bonds

The Ultra U.S. Treasury Bonds speculator position registers number four in this week’s bullish extreme standings. The Ultra Long T-Bond speculator level sits at a 93 percent score of its 3-year range. The six-week trend for the speculator strength score was 19 points this week.

The speculator position was -209,526 net contracts this week with a drop by -19,812 contracts in the weekly speculator bets.

Japanese Yen

The Japanese yen speculator position rounds out the top five in the extreme standings this week. The Japanese yen speculator level is at a 87 percent score of its 3-year range.

The six-week trend for the speculator strength score totaled a decline of -11 points this week. The overall speculator position was 132,277 net contracts this week with an increase by 1,400 contracts in the speculator bets.

This Week’s Most Bearish Speculator Positions:

Sugar

The Sugar speculator position also comes in tied at the top of the most bearish extreme standing of the week. The Sugar speculator level is at a 0 percent or minimum level score of its 3-year range.

The six-week trend for the speculator strength score was a decline by -23 points this week. The overall speculator position was -47,220 net contracts this week with an edge lower by -79 contracts in the speculator bets.

Soybean Meal

The Soybean Meal speculator position comes in tied for the most bearish extreme standing on the week. The Soybean Meal speculator level is at a 0 percent score of its 3-year range.

The six-week trend for the speculator strength score was drop by -10 points this week. The speculator position was -76,064 net contracts this week with a decrease by -16,876 contracts in the weekly speculator bets.

5-Year Bond

The 5-Year Bond speculator position also comes in tied as the most bearish extreme standing this week as the 5-Year speculator level is at a 0 percent or minimum level score of its 3-year range.

The six-week trend for the speculator strength score was -13 points this week. The overall speculator position was -2,463,629 net contracts this week with a decline of -20,348 contracts in the speculator bets.

US Dollar Index

The US Dollar Index speculator position comes in also tied atop as the most bearish extreme standings. The USD Index speculator level is rounded to a 0 percent score of its 3-year range.

The six-week trend for the speculator strength score was a decrease by -12 points this week. The speculator position was -6,034 net contracts this week with a decline of -3,066 contracts in the weekly speculator bets.

Ultra 10-Year U.S. T-Note

Finally, the Ultra 10-Year U.S. T-Note speculator position comes in as the fifth most bearish extreme standing for this week. The Ultra 10-Year speculator level is at just a 1 percent score of its 3-year range.

The six-week trend for the speculator strength score was a reduction by -13 points this week. The speculator position was -367,108 net contracts this week with a dip by -19,423 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.