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
Overall commodity indexes are extended with sentiment and seeing some DeMark exhaustion signals. Energy has some new DeMark exhaustion signals with Nat Gas and Gasoline. Metals are mixed with silver looking better short term over gold. Platinum and Palladium gave back all of the Ukraine spike. Copper is dead money. Grains have a little upside potential but I would not chase with Wheat near exhaustion. Livestock shows lower highs developing. Softs show cotton with a little more upside potential ahead of exhaustion while coffee looks like it can be shorted again. Sugar might back off which could be a good opportunity to buy. Lumber is holding support and likely will break it.
BLOOMBERG COMMODITY INDEX DAILY AND WEEKLY
Bloomberg Commodity Index daily has now another DeMark Sequential sell Countdown 13. Back in February, there was a Sequential 13 and at the time I said throw the signals out the window if Russia invades Ukraine. At the spike higher all of the commodity bullish sentiment readings hit historical peak levels backed off and now are inching back into the extreme zone. I’m on alert for various commodity markets to back off. Maybe not a big move but some consolidation is due.
Bloomberg Commodity Index Weekly has had DeMark exhaustion signals with some residual strength.
COMMODITY SENTIMENT OVERVIEW
OIL AND ENERGY
Bloomberg Energy Subindex with several sell Countdown signals in play
WTI Crude futures daily with a higher low developing?
Brent Crude futures daily
WTI Crude futures bullish sentiment hit 96% at the highs backed off and now could be setting up for a lower high divergence
WTI Crude futures Commitment of Traders shows speculators decreasing some long exposure
Natural Gas futures daily now with the expected DeMark Sequential and Combo sell Countdown 13’s. Adding a short position here makes sense.
Natural Gas futures bullish sentiment is extreme at 92% for three days in a row
Natural Gas futures Commitment of Traders shows large speculators set up short
Gasoline RBOC futures daily with new DeMark Sequential Countdown 13’s
Metals
Gold futures daily
Gold futures bullish sentiment is extreme at 82% with a lower high
Gold futures Commitment of Traders shows speculators increasing long exposure
Silver futures daily still has a little more upside potential with the Sequential in progress
Silver futures bullish sentiment is also extreme but might stay up here until we see the DeMark exhaustion 13 perhaps later this week
Silver futures Commitment of Traders shows speculators increasing long exposure
Copper futures daily
Copper futures bullish sentiment is at 71%. The chart has a bad tick on the site
Copper futures Commitment of Traders shows speculators decreasing long exposure
Platinum daily has backed off big time after the Ukraine spike
Platinum bullish sentiment decreased back to 50% and is holding for now.
Platinum Commitment of Traders shows speculators decreasing long exposure
Palladium daily also backed off big time after the Ukraine spike
Palladium bullish sentiment backed off and has held 50% give or take a few ticks lower
Palladium Commitment of Traders shows a more neutral setup for both speculators and commercials
Grains
Corn futures daily is getting extended again
Corn futures bullish sentiment remains in the extreme zone over 80%.
Corn futures Commitment of Traders shows speculators increasing long exposure
Wheat futures daily is very close to triggering the DeMark Sequential sell Countdown 13
Wheat futures bullish sentiment spiked back up and is in the extreme zone
Wheat futures Commitment of Traders tightly wound with speculators increasing long exposure
Soybean futures daily
Soybean futures bullish sentiment is extreme while making lower highs
Soybean futures Commitment of Traders shows speculators slightly decreasing long exposure
Livestock
Cattle futures daily making lower highs
Cattle futures bullish sentiment is under a little pressure and under the majority line (50%)
Cattle futures Commitment of Traders shows speculators adding some long exposure
Lean Hogs futures daily also with a potential lower high
Lean Hogs bullish sentiment remains under some pressure under the 50% majority line
Lean Hogs Commitment of Traders shows speculators set up long and decreasing long exposure
Softs
Cotton futures daily is getting extended and has a little more to go to get the DeMark Sequential sell Countdown 13
Cotton futures bullish sentiment remains in the extreme zone
Cotton Futures Commitment of Traders shows speculators remaining very long while there was a small decrease in exposure
Coffee futures daily with a potential lower high. Look at Coffee as a short again. We were short from the highs to the buy Countdown 13 for a 15% gain.
Coffee futures bullish sentiment is under pressure at 36%. A bad tick on the chart
Coffee futures Commitment of Traders shows speculators adding to long exposure
Sugar futures daily stopped at the upside wave 3 price objective. Look for a higher low pullback to buy
Sugar futures bullish sentiment has been steady. A back off to 50% might be the level to add long
Sugar futures Commitment of Traders shows speculators adding heavily to already long positions
Cocoa futures daily sideways chop.
Cocoa futures bullish sentiment also with a sideways chop under 50% majority line
Cocoa futures Commitment of Traders shows speculators increasing long exposure
Lumber futures daily likely will continue the downside DeMark Sequential Countdown. 200 day in yellow is flat and has been support
Lumber bullish sentiment is comical as it goes from end to end so quickly.