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Traders Haven't Been This Short Platinum In Years


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Mar 25, 2010
Traders Haven't Been This Short Platinum In Years
May 17, 2017 2:44 PM ET

Movement Capital

Registered investment advisor, fund holdings, macro, commodities

Bonds: Eurodollar shorts have recently come under pressure, speculators got a bit more bearish on the 10-year Treasury last week.

Commodities: Commercial hedgers are betting on higher prices in cocoa and soybeans. Traders are massively short platinum and they removed a significant amount of long silver exposure last week.

Currencies: EUR/USD and MXN/USD are both consensus long trades. GBP/USD short covering continued last week.

Stocks: Nikkei positioning has reversed since early 2016. Traders are much more bullish on the Dow than the Nasdaq or S&P.

Note: My approach for analyzing CoT data to reveal how different types of traders are positioned in the futures markets is outlined here. If you missed it, give the article a read to see the method behind my analysis. All data and images in this article come from my website.

This article outlines how traders are positioned and how that positioning has recently changed. I break down the updates by asset class, so let's get started.


Traders got a tad more bearish on the 10-year (NYSEARCA:IEF) last week.

The Eurodollar contract measures what traders think 3-month USD LIBOR will be. If Eurodollar futures are priced at $99, that means people expect LIBOR to be 1% in the future. Eurodollar futures have recently sold off as short-term interest rates have risen. Speculators have been extremely short the contract, betting on short-term rates to go even higher. Eurodollar futures have actually increased over the past few weeks as people have lowered their rate expectations of a Fed rate hike in June. This has put pressure on the large amount of shorts.


Positioning in WTI crude oil (NYSEARCA:USO) has quickly reversed. Back in late February, speculators had a huge net long position on. They've since closed out of their longs and added to their shorts. Current positioning is a stone's throw away from the positioning levels that marked short-term price bottoms in 2016.

Soybeans (NYSEARCA:SOYB), and agricultural commodities in general, remain one of my most watched asset classes. Traders are extremely short soybeans and agricultural commodities are by far the least loved commodity category.

Commercial hedgers haven't been this net long cocoa (NYSEARCA:NIB) futures in five years. Commercial producers sell futures to lock in prices for their future production and commercial users buy futures to lock in prices for their future inventory needs. A lack of hedging by commercial producers and a high amount of buying from commercial users indicates the "smart money" is positioned for a rise in cocoa prices.

Speculators finally threw in the towel on a large amount of their silver (NYSEARCA:SLV) longs last week.

Speaking of precious metals, last week saw a huge shift in platinum (NYSEARCA:PPLT) positioning. With a 5-year CoT percentile of 0%, traders haven't been this net short platinum futures in five years.

Crowded short positioning, which I define as a 5-year percentile of net positioning as a % of OI < 10%, isn't simply a reason to go long. Traders who are short platinum have zero incentive to cover their shorts as long as the trend goes their way. If the price of platinum were to reverse, then that might be a reason for concern. This is because you would start seeing a large number of people heading for the exits (to close short positions) at the same time. I call this a "fire in the theater" situation.


Traders haven't been this net long EUR/USD (NYSEARCA:FXE) futures since the fall of 2013. International asset classes have grown in popularity in 2017, putting upward pressure on foreign currencies.

Speculators have continued to cover their GBP/USD (NYSEARCA:FXB) shorts.

The Mexican peso remains an extremely crowded long trade. The currency substantially fell in value against the USD in 2016 and has risen ~15% since the election.


Trader positioning in S&P (NYSEARCA:SPY) futures is tilted to the long side, but it has been far more extreme in the past. CoT data successfully revealed just how bearish speculators were in 2015 and 2016.

The Nikkei (NYSEARCA:EWJ) has evolved from a contrarian long to a consensus long over the past few months. Traders got even more bullish last week.

Positioning is a mixed bag in VIX (NYSEARCA:VXX) futures. Most of you have probably seen a chart of the huge outstanding short position in VIX futures. While this number is big, it needs to be adjusted for the growth in the size of the VIX futures market. My 5-year percentile does just that. As you can see, the short position of speculators isn't that big relative to the past.


So what are the main takeaways from this week's CoT data? Three things:

  1. Traders are very bearish on a select group of commodities: platinum, cocoa, and soybeans
  2. EUR/USD and MXN/USD are crowded long trades
  3. S&P positioning isn't stretched yet, but it is clear that speculators have steadily added to their long positions
If you have any questions about CoT data, don't hesitate to ask me in the comments below.

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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: The author does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked in this article or incorporated herein. This article is provided for guidance and information purposes only. Investments involve risk are not guaranteed. This article is not intended to provide investment, tax, or legal advice. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility