COT Reports: If you are not familiar, the Commitments of Traders (COT) reports provide a breakdown of each Tuesday’s open interest for markets in which 20 or more traders hold positions. In other words, it gives us a preview of what commercial interests are buying or selling. As the theory goes, we want to be on the same side of the trade as the big guys.
While not a good timing tool, currencies, commodities and the stock market (to a lesser extent) tend to move in the direction of the bets made by the commercial players. Not always, but often enough.
Latest data, as of January 12th, 2016
Currencies:
- USD: 1K Long Vs. 56K Short – No changes. Substantial short interest remains.
- Canadian Dollar: 80K Long Vs. 2K Short – No changes. Significant long interest remains.
- British Pound: 160K Long Vs. 4K Short – Significant increase in net long exposure. British pound remains bullish.
- Japanese Yen: 72K Long Vs. 70K Short – Neutral.
- Euro: 136K Long Vs. 17K Short – Slight decrease in net short exposure. Euro remain bullish.
- Australian Dollar: 80K Long Vs. 1K Short – Significant increase in net long exposure. Significant long position remains.
Conclusion: Based on the information above, commercial interests expect the US Dollar to decline while Canadian Dollar, British Pound, Euro Japanese Yen and Australian Dollar rally. This is consistent with our view that the FED won’t raise rates.
Markets/Commodities/Volatility:
- E-Mini S&P 500: 304K Long Vs. 313K Short – Net neutral position remains.
- Nasdaq 100-Mini: 16K Long Vs. 161K Short – Sizable short position. Slight decrease in net short position.
- VIX: 48K Long Vs. 56K Short – Neutral
- Gold: 48 Long Vs. 45K Short – Gold is back to being neutral.
Conclusion: Based on the information above, commercial interests are now net neutral the S&P, VIX and gold. At the same time, commercials now have a very large short position on the Nasdaq. That is important.
Next Week’s Market Calendar:
- Q-4 Earnings.
COT Reports & Weekly Market Calendar – January 8th, 2016 Google