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 44th 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.
Money managers went long another $800 million worth of WTI crude (NYSEARCA:USO) futures last week. They haven't been this large of a net long position in five years.
Money managers have also gotten more positive on corn (NYSEARCA:CORN), although their bullish positioning is not nearly as extreme.
Natural gas (NYSEARCA:UNG) producers are very short, selling futures to lock in prices for their future production.
Being long silver (NYSEARCA:SLV) was a super crowded trade last summer. Most of that excessive positioning has been unwound, and money managers aren't particularly bullish or bearish right now.
Hedge funds have steadily covered shorts in EUR/USD (NYSEARCA:FXE) futures since the lows in December.
The Japanese yen (NYSEARCA:FXY) provides a perfect template for how to effectively use CoT data. Last October, hedge funds were more net long JPY/USD than they had ever been over the past five years. This meant that being long was a super crowded trade. CoT data would have helped you avoid the subsequent ~15% fall against the U.S. dollar.
Institutional investors and hedge funds have stayed persistently short GBP/USD (NYSEARCA:FXB). This is pretty surprising to me, I would have expected to see some short covering by now.
Hedge funds trimmed some of their long exposure to VIX (NYSEARCA:VXX) futures last week. Their positioning is still very net short, but it's not as extreme as it was last September.
Most speculative traders are bullish on the Dow Jones (NYSEARCA:DIA). Rarely have both hedge funds and institutions been this optimistic at the same time.
One interesting thing about current trader positioning is just how few people are bullish on Nasdaq (NASDAQ:QQQ) futures.
So what are the main takeaways from this week's CoT data? Three things:
- Natural gas and WTI crude are extremely crowded on the long side
- Sentiment in precious metals has reset after last summer's excessive bullishness
- With traders short both GBP/USD and EUR/USD futures, the consensus trade in currency markets is a stronger U.S. dollar
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.