Commodity Weekly September 4, 2022

Sep 4, 2022 | Commodity Markets

Welcome to the Hedge Fund Telemetry Commodity Weekly note! We are very excited about this 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. Our subscribers have urged us to launch this stand-alone research product offering for a while. We also launched a Currency Weekly with similar analysis. These new research weekly reports 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. These reports are included in your subscription level for “small institutions” and “large institutions” subscribers.

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. FOR ALL OF THOSE WHO HAVE SUBSCRIBED, THANK YOU FOR YOUR SUPPORT.

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 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 considered 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 speculative traders 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

As mentioned previously, the bounce off the lows could make a corrective lower high wave 2 of 5. Energy has been under pressure, with Gasoline making new lows this past week, and Crude could, in the coming week, break down under the recent lows. Even Natural Gas has stalled. Several other commodities have similar lower high patterns. Lumber has a new DeMark Sequential buy Countdown 13 if you’re trading lumber. I don’t know anyone who ever has traded it.

BLOOMBERG COMMODITY INDEX DAILY AND WEEKLY

Bloomberg Commodity Index daily bounced as we have been watching and as mentioned previously this bounce is a lower high wave 2 of 5. Wave 3 on the downside will qualify if the wave 1 (yellow 1) breaks

Bloomberg Commodity Index Weekly also shows the lower high wave 2 of 5

COMMODITY SENTIMENT OVERVIEW

OIL AND ENERGY

Bloomberg Energy Subindex with a lower high here too

WTI Crude futures daily at risk of breaking lower into downside wave 3 of 5

Brent Crude futures daily

WTI Crude futures bullish sentiment has support at 50%, and if this breaks it would be significant

WTI Crude futures Commitment of Traders

Natural Gas futures daily fading after recent exhaustion signals

Natural Gas futures bullish sentiment oddly remains in the extreme zone with no reversal with price

Natural Gas futures Commitment of Traders

Gasoline RBOB futures hit a new low this past week. New buy Setup 9 expected

Gasoline futures Commitment of Traders

Metals

Gold futures daily is barely holding on here

Gold futures bullish sentiment is very oversold with a reversal. Let’s see if this can continue

Gold futures Commitment of Traders

Silver futures daily

Silver Bullish Sentiment also trying to turn off very oversold levels

Silver futures Commitment of Traders

Copper futures daily broke down which surprised me as I had expected the Sequential on day 10 of 13 to complete

Copper futures bullish sentiment failed

Copper futures Commitment of Traders

Platinum daily with new lows

Platinum bullish sentiment remains under pressure and very oversold

Platinum Commitment of Traders

Palladium daily sideways and possibly headed lower

Palladium bullish sentiment not quite that oversold

Palladium Commitment of Traders

Grains

Corn futures daily has been strong. 650 is support

Corn futures bullish sentiment reversed off extreme highs

Corn futures Commitment of Traders

Wheat futures daily has not been able to turn up

Wheat futures bullish sentiment has been improving despite price not lifting

Wheat futures Commitment of Traders

Soybean futures daily sideways

Soybean futures bullish sentiment reversed lower just under the extreme zone

Soybean futures Commitment of Traders

Livestock

Cattle futures daily held the 50 and 200 day moving averages

Cattle futures bullish sentiment trying to break out higher

Cattle futures Commitment of Traders with a weekly Sequential sell Countdown 13

Lean Hogs futures daily breaking lower

Lean Hogs bullish sentiment fading

Lean Hogs Commitment of Traders

Softs

Cotton futures daily big reversal down

Cotton futures bullish sentiment reversed hard after getting into the extreme zone

Cotton Futures Commitment of Traders

Coffee futures daily

Coffee futures bullish sentiment might have made another lower high (sorry for the pricing issue here)

Sugar futures daily has struggled to turn higher and has made lower highs

Sugar futures bullish sentiment looks better than price action

Sugar futures Commitment of Traders

Cocoa futures daily

Cocoa futures bullish sentiment also remains under pressure

Cocoa futures Commitment of Traders

Lumber futures daily with a new Sequential buy Countdown 13

Lumber bullish sentiment often moves wire to wire. It’s oversold and could reverse soon

DeMark Sequential Basics

MORE DETAILED COMMITMENT OF TRADERS DEFINITIONS