CoT: Looking Into The Future Thru Futures, Hedge Fund Buying

Homebuilder optimism declined three points m/m in January to 83. Last November’s record high 90 was three times April’s reading of 30.

Housing starts (January) are due out Thursday. December starts rose 5.8 percent m/m to 1.67 million units (SAAR). This was the highest since September 2006. Last April, starts were 934,000 units.

Existing home sales are scheduled for Friday. Sales increased 0.7 percent m/m in December to 6.76 million units (SAAR). Last May, sales were down to 3.91 million.

WTI crude oil: Currently net long 549.3k, up 13.5k.

After reclaiming last week a falling trend line from October 2018 when it peaked at $76.90, WTI ($59.47/barrel) is currently testing another falling trend line of a longer duration. In July 2008, the crude posted record $147.27, a trend line from which gets tested around $60. WTI has rallied in nine out of last 10 sessions, tagging $59.81 intraday Friday.

The daily and weekly in particular remain grossly overbought, but upward momentum is intact. In the event of a pullback, shorter-term averages lie between $55-$57, followed by horizontal support at $53.40s, and $52.20s after that. The latter is significant as this was the level the crude traded around for three doji weeks before breaking out last week.

In the meantime, according to the EIA, US crude production in the week to Jan 5 rose 100,000 barrels per day to 11 million b/d. Gasoline stocks increased as well – up 4.3 million barrels to 256.4 million barrels. Refinery utilization inched up seven-tenths of a percentage point to 83 percent. Stocks of crude and distillates, however, declined 6.6 million barrels and 1.7 million barrels to 469 million barrels and 161.1 million barrels, in that order. Crude imports dropped 650,000 b/d to 5.9 mb/d.

E-mini S&P 500: Currently net short 71.5k, up 36.6k.

Flows were in full cooperation. In the week to Wednesday, $25.9 billion moved into US-based equity funds (courtesy of Lipper). In the same week, SPY (SPDR S&P 500 ETF), VOO (Vanguard S&P 500 ETF) and IVV (iShares Core S&P 500 ETF) collectively took in $20.6 billion (courtesy of ETF.com). These are huge numbers. Bulls can only hope this continues. In the week to Wednesday, US money-market assets, which are widely viewed as cash on the sidelines, rose $6.2 billion week-over-week to $4.32 trillion and remain highly elevated. These funds have dropped since peaking at $4.79 trillion last May but are still higher than the $3.94 trillion they held in the week to March 18 last year; the S&P 500 put in a major low on the 23rd that month.

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