Commodity Markets

Commodity Weekly November 27, 2022

Nov 27, 2022

Thomas Thornton

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 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, comprises 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.

DeMark Indicators basics at the bottom of this note

HIGHLIGHTS AND THEMES

Commodities have a lot of dispersion, lacking that trend we saw earlier this year with everything working. Crude failed to break out and broke down hard and needs to make a low this week, or else this could see another 10% lower. Natural Gas has held in. However, I don’t trust the move. Gasoline futures dropped hard and also could see lower levels.

Gold and Silver backed off and need to gain momentum this week if the US Dollar continues to slide lower. Copper is struggling. Palladium and Platinum look lower. Grains are mixed. Corn needs to gain some momentum after a decent Friday. Soybeans are sideways, and Wheat drifts lower. Livestock looks lower. Cotton could be making a higher low. Coffee still looks buyable after the recent DeMark buy Countdown 13’s at the downside wave 5 price objective.

BLOOMBERG COMMODITY INDEX DAILY AND WEEKLY

Bloomberg Commodity Index daily has struggled to move above the early November highs. There has a been a sideways DeMark Sequential that we’ve been watching and to qualify the buy Countdown 13 a lower move is required.

COMMODITY SENTIMENT OVERVIEW

A mixed day on Friday. Overall there is a lot of dispersion and that makes sense looking at the Bloomberg Commodity Index chart.

OIL AND ENERGY

Bloomberg Energy Subindex also has a Sequential in progress, and like BCOM, this needs to go lower to qualify the Sequential buy Countdown 13.

WTI Crude futures daily had the potential to break out with the pending Sequential and could get another buy Setup 9 on Tuesday. I will of course keep you updated

Brent Crude futures daily could get the buy Setup 9 tomorrow.

WTI Crude futures bullish sentiment has been struggling and is still above the September lows.

WTI Crude futures Commitment of Traders large speculators and weekly DeMark Setup, Sequential, and Combo indicators. This has a weekly Sequential Countdown in progress leading me to believe new lows are possible

Natural Gas futures daily is a tricky chart with recent sharp reversals

Natural Gas futures bullish sentiment stalled late last week

Natural Gas futures Commitment of Traders large speculators and weekly DeMark Setup, Sequential, and Combo indicators

Gasoline Futures RBOB breaking down

Gasoline Commitment of Traders. A weekly Sequential in progress on the downside

Metals

Gold futures daily backed off with the recent Setup 9. I’ll update you with the pending Sequential and Setup. Remember regarding the Setup. To complete the Setup 9 there must be nine consecutive closes lower than the close four price bars earlier.  If this pattern is interrupted the Setup will cancel and disappear from the chart

Gold futures bullish sentiment improving and needs momentum this week.

Gold futures Commitment of Traders large speculators and weekly DeMark Setup, Sequential, and Combo indicators

Silver futures daily has potential this week.

Silver Bullish Sentiment with several higher lows

Silver futures Commitment of Traders large speculators and weekly DeMark Setup, Sequential, and Combo indicators

Copper futures daily has a Setup in progress that I don’t think will complete.

Copper futures bullish sentiment needs to hold 50% the midpoint

Copper futures Commitment of Traders large speculators and weekly DeMark Setup, Sequential, and Combo indicators

Platinum daily

Platinum bullish sentiment

Platinum Commitment of Traders large speculators and weekly DeMark Setup, Sequential, and Combo indicators. Sell Setup 9 could see this bounce end here

Palladium daily at risk of going lower for the year

Palladium bullish sentiment

Palladium Commitment of Traders large speculators and weekly DeMark Setup, Sequential, and Combo indicators. The Sequential in progress makes me believe this will break down.

Grains

Corn futures daily needs to move up this week

Corn futures bullish sentiment holding the summer lows

Corn futures Commitment of Traders large speculators and weekly DeMark Setup, Sequential, and Combo indicators

Wheat futures daily looking weak

Wheat futures bullish sentiment could be making a higher low. This week will be important

Wheat futures Commitment of Traders large speculators and weekly DeMark Setup, Sequential, and Combo indicators. The downside Sequential in progress makes be believe this can break lower

Soybean futures daily sideways

Soybean futures bullish sentiment (sorry for the bad tick)

Soybean futures Commitment of Traders large speculators and weekly DeMark Setup, Sequential, and Combo indicators

Livestock

Cattle futures daily another sharp reversal could see this continue with the Sequential in progress

Cattle futures bullish sentiment is overbought and has room to fall

Cattle futures Commitment of Traders large speculators and weekly DeMark Setup, Sequential, and Combo indicators

Lean Hogs futures daily tends to move with cattle

Lean Hogs bullish sentiment is also overbought

Lean Hogs Commitment of Traders large speculators and weekly DeMark Setup, Sequential, and Combo indicators. Buy Setup 9

Softs

Cotton futures daily could make a higher low if the recent lows hold

Cotton futures bullish sentiment

Cotton Futures Commitment of Traders large speculators and weekly DeMark Setup, Sequential, and Combo indicators.

Coffee futures daily still looks good as a new long idea after these buy Countdown 13’s

Coffee futures bullish sentiment improving off extreme lows. (another bad tick)

Sugar futures daily failed breakout but this could also be a corrective wave 4 of 5 pullback

Sugar futures bullish sentiment was overbought and now let’s see is this can hold 50%

Sugar futures Commitment of Traders large speculators and weekly DeMark Setup, Sequential, and Combo indicators

Cocoa futures daily

Cocoa futures bullish sentiment also with a higher low?

Cocoa futures Commitment of Traders large speculators and weekly DeMark Setup, Sequential, and Combo indicators. The Sequential in progress gives me some pause.

DeMark Sequential Basics

MORE DETAILED COMMITMENT OF TRADERS DEFINITIONS