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CFTC Commitments Of Traders Round-Up: September 2019

Analysing the CFTC Commitment Of Traders’ data provides insights into when trends in futures contracts listed on various exchanges might be ready to turn, either to the upside or to the downside, due to the activity of important market participants.

In August I saw some interesting trends in Sugar, Gold and Live Cattle. Unfortunately, September’s CFTC Commitment of Traders data didn’t produce too many opportunities that I felt particularly strong about, but I am a little bit curious about what’s
happening in the Cocoa futures market.

As Figure 1 shows, Cocoa reversed a downtrend that began in mid-August and has been in an uptrend since then. However, commercials have seized on this upward direction to get rid of their net long positions and move back into quite extreme levels of short positions. I’d therefore expect the market to revert to a downtrend.

Figure 1: Cocoa

Cocoa

Legend: Yellow = seasonal trend, black = OHLC, red = commercials, blue = large speculators, grey = small speculators, light blue = relative commercials vs open interest

Moving on how to review some of the markets we have analysed recently, one market we looked at last month was Gold, where we observed that the Gold price should begin a longer correction, which should start after a final push evidenced by a short-term increase. This increase may have happened in recent days and I am waiting for a final overbought signal by my indicators to
short-sell the market.

Figure 2: Gold

Gold

Legend: Yellow = seasonal trend, black = OHLC, red = commercials, blue = large speculators, grey =
small speculators, light blue = relative commercials vs open interest

We also expected a trend reversal for Sugar, which worked out nicely in the past few days with a potential gain of USD $1,366 per contract. And, since Commercials seem to still be rather bullish in this market, I assume this market has further potential to move higher.

Figure 3: Sugar

Sugar

Legend: Yellow = seasonal trend, black = OHLC, red = commercials, blue = large speculators, grey = small speculators, light blue = relative commercials vs open interest

Last but not least, In August we saw Commercials being positioned for an upwards move in the Soybean market whereas trend following speculators awaited a further price decline. A rally seems to have started here as well, which should have some further potential to run.

Figure 4: Soymeal

Soymeal

Legend: Yellow = seasonal trend, black = OHLC, red = commercials, blue = large speculators, grey = small speculators, light blue = relative commercials vs open interest

Hopefully October’s CoT data produces more interesting results than September’s. I’ll be back next month to see what happened!

Thomas Kochanek is CEO and Principal of 1512 St. Gallen Capital Management

Futures trading is speculative and involves the potential loss of the complete or even more of the investment. Past results are not necessarily indicative of future results. Futures trading is not suitable for all investors. Neither Thomas Kochanek nor 1512 SG Capital Management AG, are affiliated with nor do they endorse, sponsor, or
recommend any product or service advertised herein, unless otherwise specifically noted.
The information contained herein was taken from financial information sources deemed to be reliable and accurate at the time it was published, but changes in the marketplace may cause this information to become out dated and obsolete. It should be noted that neither Thomas Kochanek nor 1512 SG Capital Management AG have verified the completeness of
the information contained herein. Statements of opinion and recommendations will be introduced as such, and generally reflect the judgment and opinions of Thomas Kochanek. These opinions may change at any time without written notice, and 1512 SG Capital Management AG assumes no duty or responsibility to send updates regarding any changes. Market opinions contained herein are intended as general observations and are not intended as specific investment advice.
Any references to products offered by 1512 SG Capital Management AG are not a solicitation for any investment. This newsletter does not constitute an offer of sales of any securities. Thomas Kochanek and 1512 SG Capital Management AG may or may not have investments in markets herein.

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