Commitments of Traders

[TM]

Commitments of Traders report is available at https://cftc.gov/MarketReports/CommitmentsofTraders/HistoricalViewable/index.htm

A graphical view is at https://www.tradingster.com/cot.

Questions:

1. How do you use COT reports to anticipate the direction of S&P and DJIA?
2. The open positions of which group of traders (Commercial or Non-commercial) should be used for analysis of S&P and DJIA? Why?

[Research Department]

By looking at the position of shorts and longs held by the Commercial and the Non-Commerical. Commerical are usually large firms holding position to hedge of any risk while the Non-commercials are speculators who are trend followers who just want to profit from the short term. 

The most obvious way is to find the extreme sides of the Non-Commercial and Commercial. For example, if the Commercials are highly shorted in the market vs the Non-commercials who are longed in the market extreme when the trend is a the top, think of it like a divergence. An example is a few webinars I shared when the extremes played in late Feb and early March, which see Dow Industrial fell more than 10,000 points. 

Also, there are some of the ways that I use to such as ratios of the long short between 4 and 8 or more traders. looking at the open interest and the numbers of commitment. Of course it will be very long to type it out the ways to read the report. So I think you should focus more on the part which i mention earlier on. 

Like what I have mentioned earlier on,  the COT report is very laggy due to the fact that the calculations and aggregations are done on every Tuesday and only release on Friday. So you still need the chart to analyse the momentum. 

[TM]

Are Commercial referring to the Institutional Traders?

Thank you.

[Research Department]

Commercials are referring to Institutional funds, large companies and Government-linked corporation.

The non-commercials are purely speculators with a slightly larger fund.

[Author]

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