I love looking at the COT reports despite their obvious limitations; although they contain data three days old, they do provide an excellent window into market sentiment. Take for example the E-Mini COT report. For the past couple of weeks we have been noticing an increase in net-positive positions of the non-commercials - just as the S&P500 has been steadily moving closer to a major resistance level: 1300. As I mentioned in a post from two weeks ago, the shift in net-positive positions indicated that the S&P had some room to stretch. This week, the S&P not only managed to break above the 1300 level but also managed a Friday close above this level.
Commitment of Traders reports are far from being a magic crystal ball to predict the future. But taken in the right context, they can help us frame a short term bias.
Highlights of this week's COT reports:
- S&P E-Mini's report showing yet another increase in net-positive positions.
- EUR net positive positions increase, while DXY positions are now negative (for non-commercials)
- Ten Year Notes register another increase in net-short positions - suggesting further rate increase in the 10YR benchmark (bye, bye, cheap mortgage rates?)
- Crude net-positive positions stay elevated - not expecting to see any decline in oil prices in the near future.
Click on images below to enlarge:
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