Welcome to the first Hedge Fund Telemetry Commodity Weekly note! We are very excited about this new weekly note that will be a good overview of the major commodity markets using our charts with DeMark analysis, charts of bullish sentiment, and the weekly Commitment of Traders data. We have been urged for a while by our subscribers to launch this stand-alone research product offering. We will also be launching a Currency Weekly next week. Both of these new research weekly reports will require a separate subscription and as a current subscriber to Hedge Fund Telemetry, we have discounted the notes by 50%. These are available “a la carte” for a yearly rate of $500 each however we are offering them at $250 each. For “small institutions” and “large institutions” subscribers these reports are included in your subscription.
We will be sending this weekly to all current Hedge Fund Telemetry subscribers through the end of the year. If you would like to sign up now (which would be most appreciated) here is the link to find the offerings. Your discount will apply at checkout.
The amount of commentary on this note is a little light due to time constraints today. It normally will go out on the weekend. There are also detailed explanations of Commitment of Trader data and a DeMark Sequential primer at the bottom of this note. Please let us know your thoughts by email.
Commitment of traders – the basics
The Commitments of Traders (CoT) is a weekly report released by the Commodity Futures Trading Commission (CFTC). The CoT report outlines how different types of traders are positioned in the futures markets. There are two main types of traders in a CoT report: commercials and money managers.
Commercials are the actual producers and users of a commodity that use the futures markets to hedge. A commercial producer in the corn market could be a farmer who sells corn futures to lock in his selling price. Commercial traders are thought of as the “smart money” since they are in tune with the physical commodity business and likely have superior supply/demand information. The other main CoT trader type, money managers, is composed of hedge funds, mutual funds, and commodity trading advisors. These are speculative traders who have no interest in the underlying physical commodity business.
CoT data is most meaningful at extremes when either commercial traders or speculators are super net long or net short. The charts below are mostly self-explanatory by looking at the color-coded type of traders. For a more detailed explanation please see the bottom of this note.
Bloomberg Commodity Index Daily and Weekly
Bloomberg Commodity Index daily should work lower
Bloomberg Commodity Index Weekly
commodity sentiment overview
oil and energy
WTI Crude futures daily
Brent Crude futures daily
WTI Crude futures bullish sentiment working lower and could get oversold in the 20% zone
WTI Crude futures Commitment of Traders shows speculators selling some into the weakness while commercials were also sellers last week
Natural Gas futures daily
Natural Gas futures bullish sentiment has held up in the extreme zone despite the price weakness off the highs
Natural Gas futures Commitment of Traders shows commercials (in black) are long with speculators selling
Gasoline RBOC futures daily
Gasoline futures bullish sentiment – no chart today
Gasoline futures Commitment of Traders shows speculators long and commercials steady
METALS
Gold futures daily
Gold futures bullish sentiment fading off recent highs
Gold futures Commitment of Traders shows speculators increasing long exposure
Silver futures daily
Silver futures bullish sentiment also backing off recent high
Silver futures Commitment of Traders shows speculators increasing long exposure while commercials are selling
Copper futures daily
Copper futures bullish sentiment – sorry for the price action mess. Getting futures data can be tricky. Programmers will fix this asap. More important is the sentiment below making lower highs
Copper futures Commitment of Traders shows speculators selling with commercials adding
Platinum daily
Platinum bullish sentiment backing off recent move and under 50%
Platinum Commitment of Traders shows speculators increasing long exposure while commercials were sellers
Palladium daily
Palladium bullish sentiment is similar to the other metals with a backing off of recent positive sentiment
Palladium Commitment of Traders shows a more neutral set up for both speculators and commercials
grains
Corn futures daily
Corn futures bullish sentiment stalling
Corn futures Commitment of Traders shows speculators increasing longs while commercials were big sellers
Wheat futures daily
Wheat futures bullish sentiment is overbought at 77% but might make one more push higher
Wheat futures Commitment of Traders tightly wound with speculators increasing long exposure while commercials were sellers
Soybean futures daily might be setting up a longer-term bullish pattern. Buy dips
Soybean futures bullish sentiment stalled after coming off a very oversold period
Soybean futures Commitment of Traders shows speculators increasing long positions while commercials were sellers
livestock
Cattle futures daily
Cattle futures bullish sentiment is trying to emerge from a long period of sentiment under 50%
Cattle futures Commitment of Traders shows speculators set up short while commercials have been steady buyers
Lean Hogs futures daily
Lean Hogs bullish sentiment remains in a weak position
Lean Hogs Commitment of Traders had speculators very long (and caught out). They increased long exposure a little last week
Softs
Cotton futures daily is overbought
Cotton futures bullish sentiment has been in a bullish zone for most of the year. A break of 60% support should be watched
Cotton Futures Commitment of Traders shows speculators remaining very long while commercials have been selling (hedging the high price of cotton)
Coffee futures daily
Coffee futures bullish sentiment with another price mess however the important data the extreme high sentiment at 93%.
Coffee futures Commitment of Traders shows speculators adding to already very long positions
Sugar futures daily
Sugar futures bullish sentiment has backed off while the price has held up OK
Sugar futures Commitment of Traders shows speculators adding heavily to already long positions while commercials were sellers last week
Cocoa futures daily
Cocoa futures bullish sentiment backed off hard Friday and needs to clear 50% and hold above for a bullish run
Cocoa futures Commitment of Traders shows speculators buying again after being sellers for weeks. Commercials were sellers last week after increasing long exposure into the decline.
Lumber futures daily (sorry no CoT data for lumber)
Lumber bullish sentiment has a way of moving very fast and it’s moving higher and could get back to an extreme bullish position
Demark Sequential basics
More detailed Commitment of Traders definitions
