Welcome to the 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 (Daily Sentiment Index), 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 too. Both of these new research weekly reports will require a separate subscription and with a current subscription 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 our “small institutions” and “large institutions” subscribers these reports are included in your subscription. Soft dollar broker payment arrangements are available. Send us an email if interested.
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.
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 still under siege
Bloomberg Commodity Index Weekly broke the 20 week moving average in quite a pronounced way
COMMODITY SENTIMENT OVERVIEW
OIL AND ENERGY
WTI Crude futures daily
Brent Crude futures daily
WTI Crude futures bullish sentiment is oversold
WTI Crude futures Commitment of Traders shows speculators selling some into the weakness while commercials were buyers last week
Natural Gas futures daily
Natural Gas futures bullish sentiment just broke 50% and is at a make or break level.
Natural Gas futures Commitment of Traders shows commercials sold a little with speculators buying
Gasoline RBOC futures daily
Gasoline futures Commitment of Traders shows speculators sold and commercials were buyers
Metals
Gold futures daily
Gold futures bullish sentiment dipped a little more last week. I am watching if this can hold and make a higher low or else it’s back to 10%
Gold futures Commitment of Traders shows speculators flipped and sold down long exposure with commercials buying
Silver futures daily
Silver futures bullish sentiment hit very low levels earlier this week and bounced
Silver futures Commitment of Traders shows speculators selling down small long exposure while commercials are bought after selling for weeks
Copper futures daily
Copper futures bullish sentiment – sorry for the price action mess. Getting futures data can be tricky. Important is the sentiment below making lower highs and lower lows
Copper futures Commitment of Traders shows speculators selling with commercials adding which has been the trend for weeks
Platinum daily
Platinum bullish sentiment is oversold and has been under pressure all year
Platinum Commitment of Traders shows speculators decreasing long exposure while commercials were buyers
Palladium daily
Palladium bullish sentiment is oversold with a small bounce
Palladium Commitment of Traders shows a more neutral set up for both speculators and commercials
Grains
Corn futures daily
Corn futures bullish sentiment has been holding above 50%
Corn futures Commitment of Traders shows speculators starting to reduce long exposure while commercials were buyers
Wheat futures daily
Wheat futures bullish sentiment fell this week after being in the extreme zone over 80% for a month
Wheat futures Commitment of Traders tightly wound with speculators decreasing long exposure while commercials were buyers
Soybean futures daily
Soybean futures bullish sentiment has been oversold and might have made a higher low and could continue higher this week
Soybean futures Commitment of Traders shows speculators decreasing long positions while commercials were buyers again continuing the trend of smart money buying
Livestock
Cattle futures daily
Cattle futures bullish sentiment reversed down this week
Cattle futures Commitment of Traders shows speculators continued trend of buying while commercials have been steady sellers
Lean Hogs futures daily
Lean Hogs bullish sentiment is oversold and would need to clear 40% to reverse trend
Lean Hogs Commitment of Traders had speculators very long (and caught out) into the decline and last week they increased long exposure again while commercials were sellers
Softs
Cotton futures daily
Cotton futures bullish sentiment has been overbought and broke hard
Cotton Futures Commitment of Traders shows speculators remaining very long and reduced positions while commercials have been selling (hedging the high price of cotton) started to buy again
Coffee futures daily
Coffee futures bullish sentiment remains in the extreme zone. Sorry about the coffee pricing. We’ll get it sorted as we have been updating our data supplier.
Coffee futures Commitment of Traders shows speculators with very long positions reducing a little while commercials were small buyers
Sugar futures daily
Sugar futures bullish sentiment reached the oversold zone
Sugar futures Commitment of Traders shows speculators starting to sell very long positions while commercials were buyers last week
Cocoa futures daily
Cocoa futures bullish sentiment hit an oversold level
Cocoa futures Commitment of Traders shows speculators selling again while Commercials were buyers increasing long exposure into the decline. This is a decent read on a coming bounce.
Lumber futures daily (sorry no CoT data for lumber)
Lumber bullish sentiment hit an extreme overbought level. This sentiment tends to go to extremes
DeMark Sequential Basics
MORE DETAILED COMMITMENT OF TRADERS DEFINITIONS
