Some Perspective On The Latest Commitment Of Traders Report

67
Mon, May 22, 2017 - 8:00am

Last Friday's CoT for the Comex Metals was rather interesting from a historical perspective. Because of this...and because we know that not everyone listened to Friday's podcast...it seemed appropriate to type up this written summary today.

Before we begin, it is VERY important to note the restrictions that have been deliberately placed on this info by the CFTC. Even though the Commitment of Traders reports are surveyed at the Comex close each Tuesday, the CFTC purposefully waits 74 hours before releasing the data to the general public. As you consider the degree to which the "regulators" at the CFTC are complicit in the ongoing price management and manipulation, ask yourself why it takes a handful of dedicated public servants 3 days to crank out these spreadsheets: https://www.cftc.gov/dea/futures/other_lf.htm

Also, we are going to assume that this data is accurate. There have been occasions in the past where the CFTC has put out some numbers that seemed odd and inconsistent to those of us who follow the reports weekly....only to have the CFTC come back the following week and correct their "mistakes".

And lastly, never assume that this data is sacrosanct and honestly reported by The Banks. Over just the past three years, JPMorgan has been fined on several occasions for knowingly submitting false data:

  • https://www.bloomberg.com/news/articles/2016-03-23/jpmorgan-fined-by-cft...
  • https://www.cftc.gov/PressRoom/PressReleases/pr6968-14
  • OK, now that we have that behind us, let's take a look at last Friday's report and point out a few of the important points.

    Let's start with Comex Digital Gold (or as we call it here, "CDG"). As you assess where price may go from here, please consider the following:

    • Over the past three reporting weeks, price has fallen by $35 or nearly 3%.
    • During this time period, the Large Speculators in CDG have reduced their NET long position by over 71,000 contracts or about 37%.
    • As of last Tuesday, when this latest CoT was surveyed, the Large Spec NET long position was just 126,724 contracts and the Commercial NET short position was just 142,859 contracts. These are the lowest NET positions since the CoT survey of February 21, 2017.
    • At 142,859 contracts NET short, the Commercial NET short position has been trimmed by more than 1/3 in just the past three weeks.
    • Perhaps most importantly from a historical perspective, at the recent price highs of July 5, 2016, the NET long position of the Large Specs was 316,037 contracts and the NET short position of the Commercials was 340,207. Ask yourself how high might price rise if these 200,000 Spec longs return to the Comex over the next few months?

    Finally, for CDG, consider this chart:

    Now let's turn our attention to Comex Digital Silver or "CDS" for it's here that the changes are rather eye-opening. Let's lay some of them out as we did above for CDG:

    • Over the past five weeks, price has fallen by $1.58 or about 8.6%.
    • During this same time period, the Large Specs have reduced their NET long position by over 62,000 contracts or about 59%.
    • As of last Tuesday, the Large Spec NET long position was just 43,004 contracts and the Commercial NET short position was just 57,337 contracts. These are the lowest NET positions since February 2, 2016.
    • At 57,337 contracts, the NET short position of the Commercials has been cut almost exactly in half over the past five weeks from an alltime high total of 114,4141 contracts on April 11.

    As you can see, just as in Comex Digital Gold, the recent CoT changes in Comex Digital Silver are significant. But, there are a few more remarkable datapoints you need to know. Again, these are from the report surveyed last Tuesday and released late last Friday:

  • Here at TFMR, we like to look at what we call "The Large Spec Net Long Ratio" when we consider the "bullishness" or "bearishness" of the survey. All we do is take the summary positions from the silver report and divide Spec longs by Spec shorts. The lowest ratio we've ever recorded came from the CoT surveyed July 21, 2015. On that report, the Large Specs in silver were long 66,576 contracts and short 62,331. This produced a ratio of just 1.07:1.
  • On February 28, 2017, we observed the highest ratio we've ever seen at 6.04:1. This ratio was still 4.99:1 five weeks ago with the CoT surveyed April 11. As of last Tuesday, the ratio is all the way down to just 1.75:1 and this is the lowest Large Spec Net Long Ratio we've seen since January 19, 2016.
  • At 112,949 contracts, the GROSS short position of the silver Commercials is the smallest since the CoT of April 5, 2016.
  • The GROSS short position of the Large Specs stood last week at 57,138 contracts, up from 26,454 contracts five weeks ago. But that's not the interesting part. Consider this: At 57,138 contracts, this is the largest Large Spec GROSS short position in silver since the CoT Survey of August 4, 2015.
  • As in CDG, let's put this data onto charts. See below:

    In the end, what does all this mean?

    Well, I suppose you could make the case that these most recent selloffs have washed out any "excess Speculator bullishness" that might have been present a few weeks ago. The CoT could also imply that upside potential now outweighs downside risk. However, for the reasons listed back at the beginning of this post, no one should ever make a trading or physical purchase decision based upon CoT info alone.

    That said, given the similarities the current CoT structure has to the CoTs of late 2015 and early 2016, it seems safe to conclude that the prices of CDG and CDS are very close to...or have made...new bottoms. History suggests that the turnaround may not be immediate but the next price move from these lows could once again be substantial.

    TF

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    turd [at] tfmetalsreport [dot] com ()

      67 Comments

    sengfarmer
    May 22, 2017 - 8:12am

    ?

    Could it be? Yes, the old farmer has struck gold again :)

    vonburpenstein
    May 22, 2017 - 8:13am

    One...

    ...Day we r gonna wake up and be pleasantly surprised and it will have all been worth it

    Close

    RETSPY
    May 22, 2017 - 8:17am

    1st

    This old curmudgeon is keyed to the written word.

    Thanks, TF, for all that you do.

    Jihk2431
    May 22, 2017 - 8:53am

    Turd, what's your gut telling you?

    Is this going to run? It's looks like the COT, combined with the pig now under 97, could portend a big move. I've been waiting for a signal to put some cash to work, so maybe this is it.

    fluxplus
    May 22, 2017 - 8:54am

    Simalar CDG numbers as of end of February

    Turd, looking at your daily chart we had similar CDG numbers as of end of February. And then a few days up and then $60 down to $1200. Is something similar being orchestrated now?

    Marcrward
    May 22, 2017 - 8:55am

    cash to work...

    do IOUs do any work?

    chrtoo
    May 22, 2017 - 9:06am

    Happy Firecracker Day, Canada!

    (Queen) Victoria Day Weekend!

    Well, not any longer but when I was younger it was the best holiday of the year!

    Now, I get to tell my kids about how reckless their Grandparents were to allow their kids to play with fire & explosives, largely unsupervised! Those were the days!

    I still have all ten fingers and both eyes even though I probably started playing with these when I was six.

    CHR.

    infometron
    May 22, 2017 - 9:16am

    A MUST READ FOR ALL TURDVILLE! (Especially you, @Libero)

    Here is your alternative 'narrative' regarding Comey, the Clintons, and the 'Russians':

    https://operationdisclosure.blogspot.ca/2017/05/trump-dropping-hammer-on-comey.html?m=1

    I'll let @Libero inform us as to which 'narrative' comes closest to the TRUTH! (If he can handle it) Perhaps some inkling of hope for draining the swamp remains!?

    EDIT: I just noticed @jwmkratz posted a link to this incredible bombshell on the previous thread, sourcing from Santa's site!

    infometron
    May 22, 2017 - 9:29am

    Jim Rickards

    https://dailyreckoning.com/perils-market-complacency/

    He thinks gold could be the 'big' story this week

    Mickey
    May 22, 2017 - 9:35am

    comey issue

    the big question is the credibility of the author. I like what she says but ......

    however we know something is not Kosher the way Comey indicted Clinton verbally then gave her a pass.

    and all the Lynch Bullshit. For that matter Holder bullshit-why did we never prosecute any bankers-Holder said the reason was their attorneys were better than govt.

    well then let the media prosecute the bankers.

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