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 July 15th.
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)
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The Nasdaq speculator position comes in as the most bullish extreme standing this week with the Nasdaq-Mini speculator level now at a 93 percent score of its 3-year range.
The six-week trend for the percent strength score was a rise of 31 percentage points this week. The overall speculator position registered 34,892 net contracts this week with a weekly gain of 3,681 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.
The Silver speculator position comes up number two in the extreme standings this week. The Silver speculator level is at a 90 percent score of its 3-year range.
The six-week trend for the speculator strength score totaled a change of -2 points this week. The overall speculator position was 59,448 net contracts this week with a small increase by 927 contracts in the speculator bets.
The Lean Hogs speculator position comes in next this week in the extreme standings as the Lean Hogs speculator level resides at 90 percent score of its 3-year range.
The six-week trend for the speculator strength score came in at a rise of 12 percentage points this week. The overall speculator position was 82,803 net contracts this week with a change of -8,097 contracts in the weekly speculator bets.
The MSCI EAFE MINI speculator position shows up next in this week’s bullish extreme standings. The MSCI EAFE-Mini speculator level sits at a 88 percent score of its 3-year range. The six-week trend for the speculator strength score was a decline of -4 points this week.
The speculator position was -873 net contracts this week with a drop by -3,971 contracts in the weekly speculator bets.
The Ultra U.S. Treasury Bonds speculator position rounds out the top scores in this week’s bullish extreme standings. The Ultra Long T-Bond speculator level sits at a 85 percent score of its 3-year range. The six-week trend for the speculator strength score showed no change this week.
The speculator position was -228,618 net contracts this week with a decline of -5,794 contracts in the weekly speculator bets.
The Bitcoin speculator position comes in as the most bearish extreme standing this week. The Bitcoin speculator level is at a 0 percent score of its 3-year range.
The six-week trend for the speculator strength score was a dip by -4 points this week. The overall speculator position was -2,486 net contracts this week with a dip of -50 contracts in the speculator bets. With the Bitcoin price hitting all-time highs, the weak speculator positioning indicates that speculators may be hedging contracts in the futures market to protect themselves from price declines.
The 5-Year Bond speculator position comes in next for the most bearish extreme standing on the week with the 5-Year speculator level is at just 1 percent score of its 3-year range.
The six-week trend for the speculator strength score was a decline by -5 points this week. The speculator position was -2,505,528 net contracts this week with a rise of 11,259 contracts in the weekly speculator bets.
The Soybean Meal speculator position comes in as third most bearish extreme standing of the week. The Soybean Meal speculator level resides at a 3 percent score of its 3-year range.
The six-week trend for the speculator strength score was a decrease by -10 percentage points this week. The overall speculator position was -79,742 net contracts this week with an increase by 5,859 contracts in the speculator bets.
The Sugar speculator position comes in as this week’s fourth most bearish extreme standing. The Sugar speculator level is at a 4 percent score of its 3-year range.
The six-week trend for the speculator strength score was -14 percentage points this week. The speculator position was -52,099 net contracts this week with a boost of 8,352 contracts in the weekly speculator bets.
Next, the US Dollar Index speculator position comes in as the fifth most bearish extreme standing for this week. The USD Index speculator level is at a 5 percent score of its 3-year range.
The six-week trend for the speculator strength score was -9 percentage points this week. The speculator position was -3,665 net contracts this week with an edge higher by 321 contracts in the weekly speculator bets.
Finally, the Ultra 10-Year speculator position comes in as the next most bearish extreme standing for this week. The Ultra 10-Year speculator level is at just a 7 percent score of its 3-year range.
The six-week trend for the speculator strength score was a dip by -2 percentage points this week while the speculator position was -379,116 net contracts this week with a jump of 29,162 contracts in the weekly speculator bets.
Article By InvestMacro – Receive our weekly COT Reports by Email
*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.
All information and opinions on this website and contained in this article are for general informational purposes only and do not constitute investment advice.
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