COT Reports & Weekly Market Calendar – January 8th, 2016

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 5th, 2016

Currencies:

USD: 1K Long Vs. 53K Short – No changes. Substantial short interest remains.
Canadian Dollar: 81K Long Vs. 2K Short – Significant increase in long interest. Significant long interest remains.
British Pound: 132K Long Vs. 3K Short – Significant increase in net long exposure. British pound remains bullish.
Japanese Yen: 72K Long Vs. 35K Short – Neutral.
Euro: 142K Long Vs. 13K Short – Slight decrease in net short exposure. Euro remains bullish.
Australian Dollar: 60K Long Vs. 3K Short – Significant 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 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: 239K Long Vs. 313K Short – Net neutral position remains.
Nasdaq 100-Mini: 12K Long Vs. 169K Short – Sizable short position. Slight increase in net short position.
VIX: 57K Long Vs. 57K Short – Neutral
Gold: 55 Long Vs. 35K 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: