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 34th weekly update 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.
Institutional investors rapidly bought the dip in 30-year Treasury (NYSEARCA:TLT) futures as long-term yields spiked.
Hedge funds took advantage of the drop in 10-year (NYSEARCA:IEF) futures and covered some of their shorts.
Positioning in copper (NYSEARCA:JJC) futures has drastically changed. Both trader categories have historically extreme positions on. Money managers are more net long than they've ever been in five years. On the flip side, copper producers and users have hedged a lot of future production and are more net short than they've been in the past five years.
Money managers have been closing out of their gold (NYSEARCA:GLD) longs, getting less bullish on the commodity.
Cotton (NYSEARCA:BAL) producers and users have a big short position on, likely meaning cotton producers are locking in high prices.
Sentiment has rapidly shifted in WTI crude oil (NYSEARCA:USO) futures. Just a couple of weeks ago massive short covering drove a rally. Now, money managers have aggressively re-shorted crude. They're as bearish as they were in September, before price rose +10%.
Beware of the crowded long positioning in sugar (NYSEARCA:SGG) futures. Money managers rode the trend all the way up, it wouldn't surprise me if downward price action caused a rapid unwinding of long positions.
The U.S. Dollar Index (NYSEARCA:UUP) is breaking out in a big way, and hedge funds have piled back into long exposure.
Institutional investors and hedge funds have completely different opinion about EUR/USD (NYSEARCA:FXE).
The Australian dollar (NYSEARCA:FXA) against the USD has become more of a consensus long position among hedge funds.
I was expecting to see hedge funds massively adding to their longs in equity futures this past week. Surprisingly enough, they actually closed out of some longs and added to new short exposure in the Nasdaq (NASDAQ:QQQ).
Everybody's still bearish on the Nikkei (NYSEARCA:EWJ).
Hedge funds exited some of their shorts in VIX (NYSEARCA:VXX) futures.
It should be noted that hedge funds are pretty bullish on S&P (NYSEARCA:SPY) futures. This level of positioning has previously marked short-term tops.
So what are the main takeaways from this week's CoT data? Three things:
- Bears are back in WTI crude futures
- Copper is an extremely crowded trade on the long side
- Sentiment is a mixed bag in equity futures. Hedge funds got more bearish on the Nasdaq, but are still quite long the S&P 500
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.
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