19 Oct

Speculator Extremes: Russell2000, VIX, USD Index & 5-Year Bonds lead Bullish & Bearish Positions

October 19, 2024

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 October 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)

Here Are This Week’s Most Bullish Speculator Positions:

Russell 2000 Mini


The Russell 2000 Mini speculator position comes in as the most bullish extreme standing this week. The Russell 2000 Mini speculator level is currently at a 100.0 percent score of its 3-year range.

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The six-week trend for the percent strength score totaled 17.8 this week. The overall net speculator position was a total of 26,337 net contracts this week with a jump by 21,330 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.

VIX


The VIX speculator position comes next in the extreme standings this week. The VIX speculator level is now at a 100.0 percent score of its 3-year range.

The six-week trend for the percent strength score was 24.6 this week. The speculator position registered 322 net contracts this week with a weekly boost by 3,330 contracts in speculator bets.

Platinum


The Platinum speculator position comes in third this week in the extreme standings. The Platinum speculator level resides at a 93.8 percent score of its 3-year range.

The six-week trend for the speculator strength score came in at 72.1 this week. The overall speculator position was 28,387 net contracts this week with a change of 4,730 contracts in the weekly speculator bets.

Coffee


The Coffee speculator position comes up number four in the extreme standings this week. The Coffee speculator level is at a 91.1 percent score of its 3-year range.

The six-week trend for the speculator strength score totaled a change of 2.9 this week. The overall speculator position was 66,950 net contracts this week with a rise of 4,235 contracts in the speculator bets.

Australian Dollar


The Australian Dollar speculator position rounds out the top five in this week’s bullish extreme standings. The Australian Dollar speculator level sits at a 90.0 percent score of its 3-year range. The six-week trend for the speculator strength score was 19.2 this week.

The speculator position was 19,269 net contracts this week with a decrease of -14,153 contracts in the weekly speculator bets.

This Week’s Most Bearish Speculator Positions:

US Dollar Index


The US Dollar Index speculator position comes in as the most bearish extreme standing this week. The US Dollar Index speculator level is at a 0.0 percent score of its 3-year range.

The six-week trend for the speculator strength score was -45.7 this week. The overall speculator position was -2,100 net contracts this week with a small reduction by -211 contracts in the speculator bets.

5-Year Bond


The 5-Year Bond speculator position comes in next for the most bearish extreme standing on the week. The 5-Year Bond speculator level is at a 6.5 percent score of its 3-year range.

The six-week trend for the speculator strength score was 5.4 this week. The speculator position was -1,630,024 net contracts this week with a decrease by -29,699 contracts in the weekly speculator bets.

2-Year Bond


The 2-Year Bond speculator position comes in as third most bearish extreme standing of the week. The 2-Year Bond speculator level resides at a 8.6 percent score of its 3-year range.

The six-week trend for the speculator strength score was -23.0 this week. The overall speculator position was -1,342,260 net contracts this week with a decline of -117,224 contracts in the speculator bets.

1-Month Secured Overnight Financing Rate


The 1-Month Secured Overnight Financing Rate speculator position comes in as this week’s fourth most bearish extreme standing. The 1-Month Secured Overnight Financing Rate speculator level is at a 9.6 percent score of its 3-year range.

The six-week trend for the speculator strength score was -29.2 this week. The speculator position was -215,156 net contracts this week with a gain of 7,304 contracts in the weekly speculator bets.

Heating Oil


Finally, the Heating Oil speculator position comes in as the fifth most bearish extreme standing for this week. The Heating Oil speculator level is at a 14.0 percent score of its 3-year range.

The six-week trend for the speculator strength score was -28.3 this week. The speculator position was -6,710 net contracts this week with a drop of -5,144 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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