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 Tuesday July 7th.
This weekly Extreme Positions report highlights the Most Bullish and Most Bearish Positions for the speculator category and is a current snapshot of how speculators were positioned as of Tuesday. 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 6-WK Trend score is the change in the Strength Index over the past 6 weeks and signals how strong and which way the Strength Index is going.
Free Reports:
The Bitcoin speculator position comes in as the most bullish extreme standing this week as the Bitcoin speculator level is currently at a 96 percent score of its 3-year range.
The six-week trend for the percent strength score totaled an increase by 19 percentage points this week. The overall net speculator position was a total of 3,500 net contracts this week with a drop of -270 contract in the weekly speculator bets.
The Bitcoin speculator strength can be seen as hedging activity. We have seen over the past years that when the Bitcoin price goes up, speculator strength falls (and can be bearish extreme) and like the current moment – when the Bitcoin price is pressured lower, the speculator positions are extremely bullish. The typical role of speculators in most of the futures markets has been as trend-followers or momentum traders that buy when price goes up and sell when price goes down but the Bitcoin market (as well as some of the stock market indexes) has shown the speculators to take hedging stances as well.
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 Cotton speculator position comes next in the extreme standings this week with the Cotton speculator level now at a 92 percent score of its 3-year range.
The six-week trend for the percent strength score was no change this week while the speculator position registered 88,428 net contracts this week with a rise of 10,580 contracts in speculator bets.
The Copper speculator position comes in third this week in the extreme standings as the Copper speculator level resides at a 87 percent score of its 3-year range.
The six-week trend for the speculator strength score came in at a decrease of -8 percentage points this week. The overall speculator position was 64,272 net contracts this week with a decline of -516 contracts in the weekly speculator bets.
The US Dollar Index speculator position comes up number four in the extreme standings this week ans the USD Index speculator level is at a 80 percent score of its 3-year range.
The six-week trend for the speculator strength score totaled a lift of 34 percentage points this week while the overall speculator position was 13,269 net contracts this week with a gain of 253 contracts in the speculator bets.
The DowJones Mini speculator position rounds out the top five in this week’s bullish extreme standings. The DowJones-Mini speculator level sits at a 79 percent score of its 3-year range and the six-week trend for the speculator strength score was an increase by 31 percentage points this week.
The speculator position was 11,480 net contracts this week with a fall of -589 contracts in the weekly speculator bets.
The Lean Hogs speculator position comes in tied as the most bearish extreme standing this week with the Lean Hogs speculator level at a 0 percent score of its 3-year range.
The six-week trend for the speculator strength score was a fall by -24 percentage points this week while the overall speculator position was -64,421 net contracts this week with a retreat of -2,150 contracts in the speculator bets.
The New Zealand Dollar speculator position comes in tied as well for the most bearish extreme standing on the week. The NZD speculator level is also at a 0 percent score of its 3-year range.
The six-week trend for the speculator strength score was a reduction of -32 percentage points this week and the speculator position was -65,189 net contracts this week with a retreat of -1,909 contracts in the weekly speculator bets.
The 3-Month Secured Overnight Financing Rate speculator position comes in as third most bearish extreme standing of the week. The SOFR 3-Months speculator level now resides at a 4 percent score of its 3-year range.
The six-week trend for the speculator strength score was a retreat of -29 percentage points this week and the overall speculator position was -2,775,954 net contracts this week with a gain of 100,586 contracts in the speculator bets.
The Fed Funds speculator position comes in as this week’s fourth most bearish extreme standing with the FedFunds speculator level at a 6 percent score of its 3-year range.
The six-week trend for the speculator strength score was a drop of -35 percentage points this week. The speculator position was -354,253 net contracts this week with a retreat of -18,236 contracts in the weekly speculator bets.
Next, the British Pound speculator position comes in as the fifth most bearish extreme standing for this week as the GBP speculator level is at a 7 percent score of its 3-year range.
The six-week trend for the speculator strength score was a reduction of -11 percentage points this week while the speculator net position was -87,903 net contracts this week with a boost of 14,244 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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