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, 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 also launched a Currency Weekly with similar analysis. 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.
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.
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.
The overview can be summed up by saying the majority of commodities still has room on the upside for gains although there are some DeMark Combo sell Countdown signals starting to trigger. The weekly time frame shows commodities are still in upside final wave 5. This could see a top in early to mid Q2.
BLOOMBERG COMMODITY INDEX DAILY AND WEEKLY charts
Bloomberg Commodity Index daily still has upside potential short term

Bloomberg Commodity Index Weekly and is on week 6 of 13 illustrating more potential upside

COMMODITY SENTIMENT OVERVIEW

OIL AND ENERGY
WTI Crude futures daily stalled in the last two days with a close under the open and near the lows. A little overbought however still has potential upside

WTI Crude futures bullish sentiment remains in the extreme zone while slightly off the highs

WTI Crude futures Commitment of Traders shows speculators selling down some long exposure

Natural Gas futures daily does not have the spike from the other day which I don’t know why but still this looks like it can go higher from here

Natural Gas futures bullish sentiment does show the spike and sentiment continues higher

Natural Gas futures Commitment of Traders shows speculators selling down some long exposure

Gasoline RBOC futures daily drifting higher

Gasoline futures Commitment of Traders shows speculators trimming small some long exposure

Metals
Gold futures daily has to be the most frustrating chart I know because it continues to disappoint longs when it starts to show some momentum on the upside. I’m long and will hold long because I believe the US Dollar can drop this week with sentiment so extreme.

Gold futures bullish sentiment with a rug pull stalling at the important 50% level

Gold futures Commitment of Traders shows speculators increasing long exposure and this was taken ahead of the rug pull late in the week

Silver futures daily shows the same sad story as gold

Silver Bullish Sentiment rug pull

Silver futures Commitment of Traders shows speculators increasing long exposure

Copper futures daily also disappointing as there were signs this could break out of the recent range

Copper futures bullish sentiment didn’t quite fall as much as gold but might hold a higher low

Copper futures Commitment of Traders shows speculators were adding to long exposure

Platinum daily stopped with the sell Setup 9 at the 200 day

Platinum bullish sentiment also could not get over the 50% breakout level

Platinum Commitment of Traders shows speculators increasing long exposure

Palladium daily has been one of my favorite longs however it might be time to sell or at least trim

Palladium bullish sentiment moved up into the extreme zone and backed off

Palladium Commitment of Traders shows a tightly wound set up

Grains
Corn futures daily is a little overbought but still has a little more upside potential

Corn futures bullish sentiment held the 50% level and continues to move into the extreme zone

Corn futures Commitment of Traders shows speculators increasing long exposure

Wheat futures daily should work lower from here

Wheat futures bullish sentiment made a longer-term lower high and could be back to the 40% level

Wheat futures Commitment of Traders tightly wound

Soybean futures daily has been one of my favorite longs and is now getting overbought with some exhaustion showing up

Soybean futures bullish sentiment backed off and rebounded. Look for a little higher move

Soybean futures Commitment of Traders shows speculators increasing long positioning

Livestock
Cattle futures daily has potential now on the upside

Cattle futures bullish sentiment looks like this can work higher. A move over 50% will add to my conviction

Cattle futures Commitment of Traders shows speculators selling down long exposure

Lean Hogs futures daily is overbought in upside wave 5

Lean Hogs bullish sentiment didn’t get into the extreme zone so this makes me unsure this is the near term high

Lean Hogs Commitment of Traders had speculators already positioned very long increasing long exposure

Softs
Cotton futures daily still has some upside potential although it’s extended

Cotton futures bullish sentiment is holding in the extreme zone and has seen strong bullish sentiment from all last year.

Cotton Futures Commitment of Traders shows speculators remaining very long trimming small

Coffee futures daily has gone sideways and I still expect to see this decline. I am fine shorting this here

Coffee futures bullish sentiment has support at 60% and below would add to my conviction

Coffee futures Commitment of Traders shows speculators setup very long and trimming small

Sugar futures daily made another lower high and likely will move below the recent low into downside wave 5

Sugar futures bullish sentiment like the chart above continues to make lower highs. Not oversold enough to call a bottom.

Sugar futures Commitment of Traders shows speculators have been decreasing long exposure adding a little earlier in the week

Cocoa futures daily reversed with another Sell Setup 9 and needs to hold support here

Cocoa futures bullish sentiment choppy and holding for now recent support at 30%

Cocoa futures Commitment of Traders shows speculators adding small to long exposure

Lumber futures daily reversed as I have been expecting with the upside DeMark exhaustion and the extreme sentiment below

Lumber bullish sentiment is wild as it goes from extreme overbought to now extreme oversold.

DeMark Sequential Basics

MORE DETAILED COMMITMENT OF TRADERS DEFINITIONS
