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 19th, 2016
Currencies:
- USD: 1K Long Vs. 57K Short – No changes. Substantial short interest remains.
- Canadian Dollar: 79K Long Vs. 2K Short – No changes. Significant long interest remains.
- British Pound: 173K Long Vs. 4K Short – Slight increase in net long exposure. British pound remains bullish.
- Japanese Yen: 68K Long Vs. 85K Short – Neutral.
- Euro: 132K Long Vs. 34K Short – Slight increase in net short exposure. Euro remain bullish.
- Australian Dollar: 94K 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 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: 380K Long Vs. 331K Short – Net neutral position remains.
- Nasdaq 100-Mini: 16K Long Vs. 140K Short – Sizable short position. Slight decrease in net short position.
- VIX: 41K Long Vs. 62K Short – Slight increase in net short exposure. Neutral position remains.
- Gold: 49 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.
- Wednesday, January 27th: FED Interest Rate Decision & Statement.
- Thursday, January 28th: Durable Goods
- Friday, January 29th: GDP Data
COT Reports & Weekly Market Calendar – January 22nd, 2016 Google