Market Analysis: Navigating the Market After the COT Report Delay
Summary
In the article by Moheb Hanna, the author discusses the significant impact of a 43-day delay in the Commitments of Traders (COT) report due to a government shutdown. This delay created a data vacuum that allowed "managed money" traders to build substantial, unseen positions in the market, particularly in soybeans.
Key Takeaways:
- The 43-day COT report delay led to a data vacuum, enabling "managed money" to establish crowded market positions.
- The release of backfilled COT data caused a "positioning shock" in markets like soybeans, resulting in sharp market reversals.
- The absence of speculative sentiment data heightened the risk of a "volatility explosion" upon the report's return.
The Impact of the Data Vacuum
The author likens trading without the COT report to flying a plane without radar, emphasizing the uncertainty traders faced during the shutdown. When the CFTC resumed operations on November 13, 2025, the backfilled data revealed a dramatic shift in soybean positions, with funds moving from a net short to a net long of over 229,000 contracts. This sudden change led to significant market adjustments as traders scrambled to realign their positions.
Market Recovery and Analysis
The recovery process was characterized by a need for patience and careful analysis, as the CFTC released the backlogged reports chronologically. This meant that traders were often working with outdated information, relying on alternative data sources like ETF flows and LME positioning to gauge market sentiment. The article highlights the importance of understanding speculative sentiment, especially when the primary indicators are unavailable.
Managed Money vs. Small Speculators
The article includes a chart illustrating the diverging net positions of managed money and small speculators in soybean futures. The managed money line showed a rapid increase, indicating a crowded long position, while small speculators were reducing their positions as prices rose, a common behavior observed in retail trading. This divergence suggests that small speculators were attempting to cover shorts or catch a market bottom as prices softened.
Conclusion
Hanna's analysis serves as a reminder of the risks associated with market opacity and the potential for volatility when critical data becomes available again. The article underscores the necessity for traders to remain vigilant and adaptable in the face of changing market conditions.