Speculator Extremes: SOFR 1-Month, Sugar & Nasdaq lead weekly Bullish Positions

By InvestMacro

The latest update for the weekly Commitment of Traders (COT) report was released by the Commodity Futures Trading Commission (CFTC) on Friday for data ending on Tuesday November 3rd.

This weekly Extreme Positions report highlights the Most Bullish and Most Bearish Positions for the speculator category and is a current snapshot of how speculators were positioned as of Tuesday. Extreme positioning in these markets can foreshadow strong moves in the underlying market.

To signify an extreme position, we use the Strength Index (also known as the COT Index) of each instrument, a common method of measuring COT data. The Strength Index is simply a comparison of current trader positions against the range of positions over the previous 3 years. We use over 80 percent as extremely bullish and under 20 percent as extremely bearish (Compare Strength Index scores across all markets in the data table or cot leaders table).

The 6-WK Trend score is the change in the Strength Index over the past 6 weeks and signals how strong and which way the Strength Index is going.

Here Are This Week’s Most Bullish Speculator Positions:

1-Month Secured Overnight Financing Rate

The 1-Month Secured Overnight Financing Rate speculator position comes in as the most bullish extreme standing this week with the SOFR 1-Month speculator level currently at a 95 percent score of its 3-year range.

The six-week trend for the percent strength score totaled a gain of 39 percentage points this week while the overall net speculator position was a total of 101,373 net contracts this week with a rise of 14,984 contract in the weekly speculator bets.

Speculators or Non-Commercials Notes:

Speculators, classified as non-commercial traders by the CFTC, are made up of large commodity funds, hedge funds and other significant for-profit participants. The Specs are generally regarded as trend-followers in their behavior towards price action – net speculator bets and prices tend to go in the same directions. These traders often look to buy when prices are rising and sell when prices are falling. To illustrate this point, many times speculator contracts can be found at their most extremes (bullish or bearish) when prices are also close to their highest or lowest levels.

These extreme levels can be dangerous for the large speculators as the trade is most crowded, there is less trading ammunition still sitting on the sidelines to push the trend further and prices have moved a significant distance. When the trend becomes exhausted, some speculators take profits while others look to also exit positions when prices fail to continue in the same direction. This process usually plays out over many months to years and can ultimately create a reverse effect where prices start to fall and speculators start a process of selling when prices are falling.

Sugar

The Sugar speculator position comes next in the extreme standings this week as the Sugar speculator level is now at a 91 percent score of its 3-year range.

The six-week trend for the percent strength score was a boost of 4 percentage points this week and the speculator position registered 185,473 net contracts this week with a retreat of -16,123 contracts in speculator bets.

Nasdaq

The Nasdaq speculator position comes in third this week in the extreme standings as the Nasdaq-Mini speculator level resides at an 84 percent score of its 3-year range.

The six-week trend for the speculator strength score came in at a decrease of -14 percentage points this week. The overall speculator position was 42,873 net contracts this week with a decrease of -5,966 contracts in the weekly speculator bets.

US Treasury Bond

The US Treasury Bond speculator position comes up number four in the extreme standings this week with the Long T-Bond speculator level at a 79 percent score of its 3-year range.

The six-week trend for the speculator strength score totaled a sharp rise higher by 55 percentage points this week while the overall speculator position was -9,097 net contracts this week with an advance of 10,041 contracts in the speculator bets.

Japanese Yen

The Japanese Yen speculator position rounds out the top five in this week’s bullish extreme standings with the JPY speculator level at a 79 percent score of its 3-year range.

The six-week trend for the speculator strength score was a lift of 8 percentage points this week and the speculator position was 102,321 net contracts this week with a small rise of 730 contracts in the weekly speculator bets.

The Most Bearish Speculator Positions of the Week:

Australian Dollar

The Australian Dollar speculator position comes in tied as the most bearish extreme standing this week with the AUD speculator level is at a 0 percent score of its 3-year range.

The six-week trend for the speculator strength score was a fall by -38 percentage points this week while the overall speculator position was -129,457 net contracts this week with a decline of -1,142 contracts in the speculator bets.

Natural Gas

The Natural Gas speculator position comes in tied as the most bearish extreme standing on the week with the Natural Gas speculator level is also at a 0 percent score of its 3-year range.

The six-week trend for the speculator strength score was a decline by -21 percentage points this week. The speculator position was -258,863 net contracts this week with a drop of -3,699 contracts in the weekly speculator bets.

Euro

The Euro speculator position also comes in tied as the most bearish extreme standing of the week as the EUR speculator level resides at a 0 percent score of its 3-year range.

The six-week trend for the speculator strength score was a decline of -31 percentage points this week and the overall speculator position was -157,791 net contracts this week with a decrease of -13,897 contracts in the speculator bets.

Lean Hogs

The Lean Hogs speculator position comes in as this week’s fourth most bearish extreme standing with the Lean Hogs speculator level at a 1 percent score of its 3-year range.

The six-week trend for the speculator strength score was a decline by -7 percentage points this week while the speculator position was -81,035 net contracts this week with an increase of 1,326 contracts in the weekly speculator bets.

New Zealand Dollar

Next, the New Zealand Dollar speculator position comes in as the fifth most bearish extreme standing for this week as the NZD speculator level is at a 5 percent score of its 3-year range.

The six-week trend for the speculator strength score was a retreat of -51 percentage points this week and the speculator position was -60,015 net contracts this week with a decrease of -2,325 contracts in the weekly speculator bets.

Article By InvestMacro – Receive our weekly COT Newsletter

*COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) were positioned in the futures markets.

The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators) as well as their open interest (contracts open in the market at time of reporting). See CFTC criteria here.