CoT Data Observations: Jan 23

I really enjoy supplementing my analysis by looking at sentiment and CoT report positioning. Its not something that should be over analyzed for every tick, but rather taken into account on extremes. Checking out the latest data, I came across an observation in Crude, Natural Gas, and Copper. Charts below:

CrudeWTI_Crude Oil.png

Natural GasNatural_Gas.png

Copper                                                                                                      Source: FreeCoTDataCopper.png

The common theme among these 3 charts? Money Managers are extremely exposed as Producers & Users are not. The most interesting observation to me is that Money Managers have not been this long Cude since the 2014 collapse.

hg.pngTo me, Crude looks great going forward. After crashing, we have formed a head and shoulders bottoming pattern with a huge bullish momentum divergence forming. The only thing is I am not the only one that sees this, as shown by the excessive long positioning. I feel we need a pullback to 48-46 before we head higher and that is where I will look to add/add energy names.

ng.pngNatural Gas has been great since a false breakdown below the 2012 lows. With a flat 200 week moving average and a bearish divergence, I do not want to be long with the crowd here. I think we need to head to 2.8 first.

cl.pngCopper had a monstrous rally, similar to the one in yields, but at the current point in time we are at resistance from 2011 highs and near a downward slopping 200 week moving average. We also have a large negative divergence in play. If Copper can continue to work away at resistance up here that would be a positive.

While these reports tell us positioning extremes, they do not tell us when the exhaustion of buyers or sellers will end. For that we have to wait and see.

Thank You.

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