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 February 2nd, 2016
Currencies:
- USD: 1K Long Vs. 57K Short – No changes. Substantial short interest remains.
- Canadian Dollar: 76K Long Vs. 10K Short – Slight decrease in net long exposure. Significant long interest remains.
- British Pound: 190K Long Vs. 5K Short – No changes. British pound remains bullish.
- Japanese Yen: 67K Long Vs. 72K Short – Neutral.
- Euro: 128K Long Vs. 64K Short – Significant increase in net short exposure. Yet, Euro remain bullish.
- Australian Dollar: 75K Long Vs. 2K Short – Slight decrease 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 and Australian Dollar rally. Japanese Yen is neutral. This is consistent with our view that the FED won’t raise rates by much.
Markets/Commodities/Volatility:
- E-Mini S&P 500: 411K Long Vs. 334K Short – Net neutral position remains.
- Nasdaq 100-Mini: 43K Long Vs. 118K Short – Sizable short position. Slight decrease in net short position.
- VIX: 22K Long Vs. 68K Short – No changes. VIX remains bearish.
- Gold: 46 Long Vs. 76K Short – Gold remains neutral.
Conclusion: Based on the information above, commercial interests are now net neutral the S&P and gold. At the same time, commercials now have a very large short position on the Nasdaq. That is important. VIX turned bearish.
Next Week’s Market Calendar:
- Q-4 Earnings.
- Wednesday: Janet Yellen’s testimony.
- Friday: Retail Sales.
COT Reports & Weekly Market Calendar – February 5th, 2016 Google