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 September 9th.
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)
The MSCI EAFE MINI speculator position continues to come in as the most bullish extreme standing again this week as the MSCI EAFE-Mini speculator level is currently at a 99 percent (just below the maximum 100%) score of its 3-year range.
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The six-week trend for the percent strength score totaled a gain of 6 percentage points this week. The overall net speculator position was a total of 13,583 net contracts this week with a small rise of 891 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.
The Lean Hogs speculator position comes next in the extreme standings this week. The Lean Hogs speculator level is now at a 96 percent score of its 3-year range.
The six-week trend for the percent strength score was an increase by 13 percentage points this week. The speculator position registered 91,584 net contracts this week with a weekly boost of 8,244 contracts in speculator bets.
The Brazil Real speculator position comes in third this week in the extreme standings with the BRL speculator level residing at a 90 percent score of its 3-year range.
The six-week trend for the speculator strength score came in at an increase by 26 percentage points this week while the overall speculator position was 56,087 net contracts this week with a rise of 22,918 contracts in the weekly speculator bets.
The Live Cattle speculator position comes up number four in the extreme standings this week. The Live Cattle speculator level is at a 83 percent score of its 3-year range.
The six-week trend for the speculator strength score saw no change this week. The overall speculator position was 106,678 net contracts this week with a decline of -3,557 contracts in the speculator bets.
The Silver speculator position rounds out the top five in this week’s bullish extreme standings. The Silver speculator level sits at a 82 percent score of its 3-year range. The six-week trend for the speculator strength score was a drop by -7 percentage points this week.
The speculator position was 53,937 net contracts this week with a decrease of -1,986 contracts in the weekly speculator bets.
The VIX speculator position comes in tied as the most bearish extreme standing this week with the VIX speculator level is at a 0 percent score of its 3-year range.
The six-week trend for the speculator strength score was a drop by -34 percentage points this week. The overall speculator position was -107,810 net contracts this week with a dip of -858 contracts in the speculator bets.
The Sugar speculator position comes in tied for the most bearish extreme standing on the week with the Sugar speculator level at a 0 percent score of its 3-year range.
The six-week trend for the speculator strength score was a decline by -18 percentage points this week. The speculator position was -139,610 net contracts this week with a sharp drop of -53,805 contracts in the weekly speculator bets.
The WTI Crude Oil speculator position comes in tied as the most bearish extreme standing of the week. The WTI Crude speculator level resides at a 0 percent score of its 3-year range.
The six-week trend for the speculator strength score was -28 percentage points this week. The overall speculator position was 81,844 net contracts this week with a reduction by -20,584 contracts in the speculator bets.
The US Dollar Index speculator position comes in as this week’s fourth most bearish extreme standing with the USD Index speculator level at a 4 percent score of its 3-year range.
The six-week trend for the speculator strength score was a dip by -4 percentage points this week while the speculator position was -5,558 net contracts this week with a shortfall of -537 contracts in the weekly speculator bets.
Next, the 5-Year Bond speculator position comes in as the fifth most bearish extreme standing for this week. The 5-Year speculator level is at a 6 percent score of its 3-year range.
The six-week trend for the speculator strength score was a decline by -2 percentage points this week. The speculator position was -2,554,763 net contracts this week with a jump by 127,224 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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