Speculator Extremes: Steel, Palladium & EAFE MINI Lead Weekly Bullish Positions
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 January 13th.
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:
Steel
The Steel speculator position comes in tied as the most bullish extreme standing this week. The Steel speculator level is currently at a 100 percent score of its 3-year range.
The six-week trend change for the strength score totaled a gain of 28 percentage points this week. The overall net speculator position was a total of 11,022 net contracts this week with an increase of 1,545 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.
Palladium
The Palladium speculator position comes in next tied at the top of the extreme standings with the Palladium speculator level at a 100 percent score of its 3-year range.
The six-week trend for the strength score was a gain 9 percentage points this week. The speculator position registered 1,225 net contracts this week with a small increase by 646 contracts in this week’s speculator bets.
MSCI EAFE MINI
The MSCI EAFE MINI speculator position comes in also tied this week in the extreme standings with a current 100 percent score of its 3-year range.
The six-week trend for the speculator strength score came in at a jump by 22 percentage points this week. The overall speculator position was 29,353 net contracts this week with a boost of 17,870 contracts in the weekly speculator bets.
US Treasury Bond
The US Treasury Bond speculator position comes up number four in the extreme standings this week with the Long T-Bond speculator level at an 88 percent score of its 3-year range.
The six-week trend for the speculator strength score totaled a rise of 15 percentage points this week. The overall speculator position was 13,835 net contracts this week with an increase by 20,667 contracts in the speculator bets.
Russell 2000 Mini
The Russell 2000 Mini speculator position rounds out the top five in this week’s bullish extreme standings. The Russell-Mini speculator level sits at an 88 percent score of its 3-year range with a six-week change in the strength score by a strong 33 percentage points.
The overall speculator position was a total of 11,437 net contracts this week with a jump by 13,540 contracts in the weekly speculator bets.
The Most Bearish Speculator Positions of the Week:
Cocoa Futures
The Cocoa Futures speculator position comes in as the most bearish extreme standing this week. The Cocoa speculator level is current at a 0 percent score of its 3-year range.
The six-week trend for the strength score was a drop by -3 percentage points this week. The overall speculator position was -9,496 net contracts this week with a decline by -12,726 contracts in the speculator bets.
Natural Gas
The Natural Gas speculator position comes in tied for the most bearish extreme standing on the week with the Natural Gas 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 drop by -44 percentage points this week while the speculator position was -185,601 net contracts this week with a decrease of -20,042 contracts.
WTI Crude Oil
The WTI Crude Oil speculator position comes in as third most bearish extreme standing of the week as the WTI Crude speculator level resides at a 6 percent score of its 3-year range.
The six-week trend for the speculator strength score was an edge higher by 2 percentage points this week. The overall speculator position was 58,128 net contracts this week with a change of 776 contracts in the speculator bets.
Sugar
The Sugar speculator position comes in as this week’s fourth most bearish extreme standing with the Sugar speculator level at a 7 percent score of its 3-year range.
The six-week trend for the strength score was a rise by 4 percentage points this week while the speculator position totaled -165,711 net contracts this week with a fall of -11,613 contracts in the weekly speculator bets.
New Zealand Dollar
Next, the New Zealand Dollar speculator position comes in as the fifth most bearish extreme standing for this week. The NZD speculator level is currently at a 9 percent score of its 3-year range.
The six-week trend for the speculator strength score was an increase by 5 percentage points this week and the speculator position was -48,851 net contracts this week with a decline of -5,488 contracts in the weekly speculator bets.
*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.
More By This Author:
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Disclosure: Foreign Currency trading and trading on margin carries a high level of risk and can result in loss of part or all of your investment.Due to the level of risk and market volatility, ...
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