COT Reports & Weekly Market Calendar – January 29th, 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 26th, 2016

Currencies:

USD: 1K Long Vs. 57K Short – No changes. Substantial short interest remains.
Canadian Dollar: 81K Long Vs. 3K Short – No changes. Significant long interest remains.
British Pound: 190K Long Vs. 5K Short – Slight increase in net long exposure. British pound remains bullish.
Japanese Yen: 63K Long Vs. 94K Short – Neutral.
Euro: 134K Long Vs. 37K Short – Slight increase in net short exposure. Euro remain bullish.
Australian Dollar: 85K Long Vs. 1K 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: 387K Long Vs. 353K Short – Net neutral position remains.
Nasdaq 100-Mini: 38K Long Vs. 128K Short – Sizable short position. Slight decrease in net short position.
VIX: 23K Long Vs. 69K Short – Significant decrease in net long exposure. VIX is now bearish.
Gold: 43 Long Vs. 60K 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: