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 February 3rd.
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 Palladium speculator position comes in as the most bullish extreme standing this week as the Palladium speculator level is currently at a 99 percent score of its 3-year range.
Free Reports:
The six-week trend for the percent strength score totaled a gain of 7 percentage points this week. The overall net speculator position was a total of 1,133 net contracts this week with an increase of 449 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 Canadian Dollar speculator position comes next in the extreme standings this week with the CAD speculator level now at a 98 percent score of its 3-year range.
The six-week trend for the percent strength score was a jump by 29 percentage points this week. The speculator position registered 2,130 net contracts this week with a weekly boost of 18,176 contracts in speculator bets.
The Steel speculator position comes in third this week in the extreme standings. The Steel speculator level resides at a 96 percent score of its 3-year range.
The six-week trend for the strength score came in at an increase by 8 percentage points this week. The overall speculator position was 11,487 net contracts this week with a dip of -853 contracts in the weekly speculator bets.
The MSCI EAFE MINI speculator position comes up number four in the extreme standings this week. The MSCI EAFE-Mini speculator level is at a 96 percent score of its 3-year range.
The six-week trend for the speculator strength score totaled a rise of 6 percentage points this week. The overall speculator position was 25,855 net contracts this week with a rise of 1,965 contracts in the speculator bets.
The Australian Dollar speculator position rounds out the top five in this week’s bullish extreme standings. The AUD speculator level sits at a 95 percent score of its 3-year range while the six-week trend for the speculator strength score was a jump of 34 percentage points this week.
The speculator position was 26,118 net contracts this week with a strong gain of 18,972 contracts in the weekly speculator bets.
The Sugar speculator position comes in as the most bearish extreme standing this week with the Sugar speculator level is at a minimum 0 percent score of its 3-year range.
The six-week trend for the speculator strength score was a drop by -12 percentage points this week. The overall speculator position was -210,289 net contracts this week with a fall of -42,536 contracts in the speculator bets.
The Cocoa Futures speculator position comes in next for the most bearish extreme standing on the week as the Cocoa speculator level is at a 3 percent score of its 3-year range.
The six-week trend for the speculator strength score was a decline of -16 percentage points this week. The speculator position was -14,508 net contracts this week with a rise of 994 contracts in the weekly speculator bets.
The Cotton speculator position comes in as third most bearish extreme standing of the week. The Cotton speculator level resides at a 14 percent score of its 3-year range.
The six-week trend for the speculator strength score was a decline of -7 percentage points this week while the overall speculator position was -42,744 net contracts this week with a decrease of -3,777 contracts in the speculator bets.
The 2-Year Bond speculator position comes in as this week’s fourth most bearish extreme standing. The 2-Year speculator level is at a 14 percent score of its 3-year range.
The six-week trend for the speculator strength score was an edge higher by 1 percentage point this week. The speculator position was -1,347,602 net contracts this week with a decline of -128,603 contracts in the weekly speculator bets.
Next, the Natural Gas speculator position comes in as the fifth most bearish extreme standing for this week with the Natural Gas speculator level at a 15 percent score of its 3-year range.
The six-week trend for the speculator strength score was a fall by -11 percentage points this week while the speculator position was -172,310 net contracts this week with a decrease by -8,704 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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