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.
highlights and themes
There were a lot of DeMark Sell Setup 9’s triggered in the last week with some pullbacks yet energy continued the trend starting new Sequential Countdowns. Commodity inflation remains and with the Bloomberg Commodity Index, both daily and especially weekly a wave 5 peak could occur in early Q2.
BLOOMBERG COMMODITY INDEX
Bloomberg Commodity Index daily is back to the October highs. A sell Setup under the TDST at 104.62 should see a pullback however other commodities have potential early Sequential Countdowns in progress. The best case here would be a pullback on this to the 50 day (higher low corrective wave 2 of 5) and then higher with RSI starting at 50

Bloomberg Commodity Index Weekly could move higher into a final upside wave 5 likely peaking in early Q2

COMMODITY SENTIMENT OVERVIEW

OIL AND ENERGY
WTI Crude futures daily did get the Setup 9 and with the lack of short term pullback I covered my trading short quickly. Now with a Sequential Countdown in progress although the RSI is back in the overbought zone.

Brent Crude futures daily same story

WTI Crude futures bullish sentiment is back in the extreme zone at 85% and moving higher into the 90% zone is quite possible as it’s happened a lot in the past

WTI Crude futures Commitment of Traders shows speculators buying back some exposure sold down in the last two months while commercials were sellers last week

Natural Gas futures daily spiked late last week with the cold temps and did complete the Setup 9. I’m going to give the benefit of the doubt to the upside in the coming weeks.

Natural Gas futures bullish sentiment is improving

Natural Gas futures Commitment of Traders shows commercials positioned long and selling down exposure with speculators buying again. A decent read for higher prices

Gasoline RBOC futures daily trending with RSI getting into the overbought zone.

Gasoline futures Commitment of Traders shows speculators slightly selling some long exposure and commercials steady

Metals
Gold futures daily coiling at best

Gold futures bullish sentiment failed again at the 50%. We want to see this get over 50% with the majority turning bullish

Gold futures Commitment of Traders shows speculators decreasing long exposure. Little to get from this report

Silver futures daily coiling

Silver Bullish Sentiment nearly hit 50% and failed. That’s the level to get the majority in the bullish camp

Silver futures Commitment of Traders shows speculators decreasing a little long exposure while commercials added steady

Copper futures daily really showed some promise last week with the upside Sequential and failed although it’s still looking OK as a long

Copper futures bullish sentiment stalling at 70% while the price action hasn’t reflected the increase in sentiment. (sorry for this pricing issue on the sentiment charts. It’s on our list)

Copper futures Commitment of Traders shows speculators selling small after raising bullish exposure with commercials adding

Platinum daily coiling

Platinum bullish sentiment remains under pressure

Platinum Commitment of Traders shows tightly wound setup

Palladium daily coiled

Palladium bullish sentiment needs to get firmly above 50%

Palladium Commitment of Traders shows a more neutral setup for both speculators and commercials

Grains
Corn futures daily holding the TDST level for now.

Corn futures bullish sentiment holding the 50% level

Corn futures Commitment of Traders shows speculators decreasing longs while commercials were buying.

Wheat futures daily still has the Sequential in progress

Wheat futures bullish sentiment has made lower highs after peaking in November. This is at risk of going lower

Wheat futures Commitment of Traders tightly wound with speculators decreasing long exposure while commercials were buyers. Hard to take much from this

Soybean futures daily

Soybean futures bullish sentiment peaked late in December and has been dropping hard. Holding 40% would be a good sign

Soybean futures Commitment of Traders shows speculators increasing long positions while commercials were sellers.

Livestock
Cattle futures daily held the TDST and has potential for a bounce from here

Cattle futures bullish sentiment
Cattle futures Commitment of Traders shows speculators selling down exposure

Lean Hogs futures daily has been a choppy mess. A break out of 90 would get attention

Lean Hogs bullish sentiment has been under pressure and has a very low 20 day moving average of sentiment at 25%. This could be a good level to move higher from

Lean Hogs Commitment of Traders had speculators positioned very long and have been selling down exposure

Softs
Cotton futures daily accelerating higher with Sequential starting

Cotton futures bullish sentiment after pulling back moving back higher and I expect it back to extreme zone this week well over 80%

Cotton Futures Commitment of Traders shows speculators set up very long while commercials have been selling

Coffee futures daily with new Sequential sell Countdown 13.

Coffee futures bullish sentiment remains in extreme zone. (sorry about the futures pricing)

Coffee futures Commitment of Traders shows speculators adding to already very long positions

Sugar futures daily has bounce potential with DeMark 13, Sentiment oversold and speculators puking long exposure last week

Sugar futures bullish sentiment remains under pressure

Sugar futures Commitment of Traders shows speculators puking large long exposure while commercials were big buyers into the move lower

Cocoa futures daily spiked out of the recent choppy range at wave 3 upside price objective

Cocoa futures bullish sentiment improving

Cocoa futures Commitment of Traders shows speculators still buying after being sellers for weeks. Commercials were sellers last week after increasing long exposure into the decline.

Lumber futures daily

Lumber bullish sentiment is and has been extreme. Overbought

DeMark Sequential Basics bloomberg

DETAILED COMMITMENT OF TRADERS DEFINITIONS
