Long Crude Oil? So Is Everybody Else

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Includes: BAL, CORN, EWJ, FXB, FXE, QQQ, SHY, SLV, TLT, USO, VXX
by: Free CoT Data

Summary

Bonds: Hedge funds aggressively bought the 2-year and added short exposure in the 30-year.

Commodities: Money managers rotated out of silver longs and WTI crude shorts. Producers & users are extremely long corn and very short cotton futures.

Currencies: Institutions are extremely long the Euro, hedge funds have followed the trend and stayed short the British pound.

Stocks: Hedge funds are betting on the VIX to stay low, institutions are extremely short the Nikkei, and positioning within U.S. indices is fairly neutral.

Note: My approach for analyzing CoT data, to reveal how different types of traders are positioned in the futures markets, is outlined here. If you missed it, give the article a read to see the method behind my analysis. All data and images in this article come from my website.

This is the 29th in a series of weekly updates that outlines how traders are positioned, and how that positioning has recently changed. I break down the updates by asset class, so let's get started.

Bonds

Hedge funds have rapidly added to their longs in the 2-year (NYSEARCA:SHY) contract. The 2-year yield has risen from 0.6% right after the Brexit vote and is now 0.85%.

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In contrast, hedge funds have continued to short the 30-year (NYSEARCA:TLT). This means that they're betting on higher long-term yields.

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Commodities

Sentiment has definitely shifted in gold & silver. Money managers have closed out of a substantial number of their longs in silver (NYSEARCA:SLV) futures. Their positioning is now similar to what it was like at the beginning of the year.

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Corn (NYSEARCA:CORN) producers & users are extremely long, betting on higher prices for the agricultural commodity.

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Money managers reduced shorts and added on more long exposure in WTI crude (NYSEARCA:USO) futures. Positioning has flipped very quickly and the long side is getting crowded. Money managers haven't been this net long WTI since July of 2014.

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Cotton (NYSEARCA:BAL) producers & users are extremely net short.

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Currencies

Institutional investors are extremely long the Euro (NYSEARCA:FXE) against the U.S. dollar.

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Hedge funds have profitably stayed short the British pound (NYSEARCA:FXB) as it's fallen in value relative to the USD. It should be noted that institutional investors covered some of their shorts last week.

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Stocks

Positioning is relatively muted in Nasdaq (NASDAQ:QQQ) futures, despite the index's proximity to all-time highs.

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Hedge funds are short VIX (NYSEARCA:VXX) futures, betting on the VIX to stay low.

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Sentiment is very bearish within Nikkei (NYSEARCA:EWJ) futures. Institutions are more net short than they've ever been in the past five years.

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Conclusion

So what are the main takeaways from this week's CoT data? Three things:

  1. Money managers are more net long WTI crude than they've been in over two years
  2. Being long gold and silver is now a much less crowded trade
  3. Both hedge funds and institutions have gotten less bullish on U.S. stock index futures

If you have any questions about CoT data, don't hesitate to ask me in the comments below.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: The author does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked in this article or incorporated herein. This article is provided for guidance and information purposes only. Investments involve risk are not guaranteed. This article is not intended to provide investment, tax, or legal advice. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.