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
The US Dollar drift continues, with sentiment getting near the oversold zone. The DXY Index has no signals on the daily; however, the Bloomberg Dollar index is nearing a Sequential buy Countdown 13. There are still some weekly Countdowns in progress, and it could take another 4-6 weeks to complete the buy Countdown 13s. The EURAUD risk on / risk off indicator could be turning, which might be an early signal for more overall market volatility.
Crypto is near topping exhaustion. Bitcoin still needs a few more days to qualify for the Sequential sell Countdown 13, while Ethereum got the DeMark Sequential sell Countdown 13 over the weekend.
Currency Sentiment Overview
Currency sentiment highlights
US Dollar Indexes
DXY US Dollar Index daily continued to drift lower
DXY US Dollar Index weekly with buy Setup 9 possible this week although the Sequential still has work to get to 13 and when that happens it will be a major buying opportunity like Q2 2021
Bloomberg US Dollar Index daily does have a Sequential in progress and could get the Sequential 13 this week
US Dollar bullish sentiment remains under pressure
US Dollar Commitment of Traders large speculators and weekly DeMark Setup, Sequential, and Combo indicators
Bitcoin and Ethereum daily
Bitcoin Daily could get the upside Sequential sell Countdown 13 this week
Bitcoin bullish sentiment bounced last week after peaking 4x at 70%
Ethereum did get the DeMark Sequential sell Countdown 13 over the weekend.
Major USD Crosses
EURUSD Euro / US Dollar steady holding the 20 day moving average
Euro bullish sentiment steay in the elevated zone >70%
Euro Commitment of Traders large speculators and weekly DeMark Setup, Sequential, and Combo indicators. Sequential on week 10 of 13
GBPUSD British Pound Sterling / US Dollar with new Combo sell Countdown 13 that needs to be watched
British Pound Sterling bullish sentiment at the highest level in over a year
British Pound Sterling Commitment of Traders large speculators and weekly DeMark Setup, Sequential, and Combo indicators
AUDUSD Australian Dollar / US Dollar sideways and might move above TDST 0.6812
Australian Dollar bullish sentiment moved higher over last week
Australian Dollar Commitment of Traders large speculators and weekly DeMark Setup, Sequential, and Combo indicators
USDCAD US Dollar / Canadian Dollar
Canadian Dollar bullish sentiment
Canadian Dollar Commitment of Traders large speculators and weekly DeMark Setup, Sequential, and Combo indicators
USDCHF US Dollar / Swiss Franc drifting with dollar
Swiss Franc bullish sentiment
Swiss Franc Commitment of Traders large speculators and weekly DeMark Setup, Sequential, and Combo indicators
USDJPY Daily Yen. After the BoJ meeting the Yen declined and started a potential Sequential Countdown. A move over 138 would continue the Countdown
Japanese Yen bullish sentiment with lower highs
Japanese Yen commodity of traders
NZDUSD Daily New Zealand Dollar at support
New Zealand bullish sentiment moved higher
RISK On Risk Off
This cross is often used as a risk-on / risk-off indicator
EURAUD Euro / Australian Dollar is starting to reverse. Risk off coming for other assets?
Three major Yen crosses
Will the recent spike continue with new Countdowns or was this just a short-term blip?
EURJPY Euro / Japanese Yen
GBPJPY British Pound Sterling / Japanese Yen
AUDJPY Australian Dollar / Japanese Yen
US Dollar vs Emerging Markets
USDTRY US Dollar / Turkish Lira
USDBRL US Dollar / Brazilian Real
USDMXN US Dollar / Mexican Peso
Mexican Peso bullish sentiment
Mexican Peso Commitment of Traders large speculators and weekly DeMark Setup, Sequential, and Combo indicators
USDZAR US Dollar / South African Rand
USDCNH US Dollar / Chinese Offshore Renminbi (Yuan) remains in a very tight range