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 May 19th, 2015
Currencies:
- USD: 4K Long Vs. 72K Short – Significant short interest remains.
- Canadian Dollar: 39K Long Vs. 57K Short – Neutral -No change from last week.
- British Pound: 84K Long Vs. 43K Short – Commercials decreased their long position – more neutral now. .
- Japanese Yen: 81K Long Vs. 35K Short – Neutral – Slightly increased their long exposure.
- Euro: 150K Long Vs. 29K Short – Significant long position.
- Australian Dollar: 93K Long Vs. 35K Short- Significant long position.
Conclusion: Based on the information above, commercial interests expect the US Dollar to decline while British Pound, Euro and Australian Dollar rally.
Markets/Commodities/Volatility:
- E-Mini S&P 500: 187K Long Vs. 647K Short – Heavy short position remains.
- VIX: 107K Long Vs. 19K Short – Heavy long position suggests market turbulence ahead.
- Gold: 54K Long Vs. 118K Short – Significant increase in short interest. Gold might decline.
Conclusion: Based on the information above, commercial interests expect the stock market to decline as volatility surges higher. Gold might decline further.
Next Week’s Market Calendar:
- May 26 – Durable Goods
