Technical Analysis of Futures Market Positioning

The following is a technical analysis of the futures market positioning as of December 31, 2024, based on the Commitment of Traders (COT) report.

US Dollar

• Traders were net-long the USD by $28.5 billion at the end of 2024.
• Net-short exposure to NZD/USD futures reached a record high for a third consecutive week.
• Large speculators increased their net-short exposure to AUD/USD futures to a 33-week high.

WTI Crude Oil

• Net-long exposure to WTI crude oil futures rose to a 23-week high.
• Speculative volumes are clearly predominantly bullish bets.
• Prices are not rising to the same degree as net-long exposure.

Commodity FX (AUD, CAD, NZD)

• Commodity currencies clearly felt the heat of the Trump trade.
• Net-short exposure to NZD/USD futures reached a record high for a third consecutive week.
• The Canadian dollar's freefall remained in play, but net-short exposure is trying to stabilize.
• AUD/USD could be looking at a move below 60c.

Wall Street Indices (S&P 500, Dow Jones, Nasdaq 100)

• Asset managers reduced net-long exposure to S&P 500 futures for four of the past five weeks.
• Asset managers also flipped to net-short exposure to Dow Jones futures.
• Net-long exposure was a tad higher for the Nasdaq last week.

Metals (Gold, Silver, Copper)

• Gold appears to be in a healthy correction against a very strong bullish trend.
• Silver seems to be caught between the flows of gold and copper.
• Managed funds have flipped to net-short exposure to copper, while large specs have trimmed net-long exposure to a mere 759 contracts.

Conclusion

The COT report provides valuable insights into the positioning of futures traders. By analyzing this data, traders can identify potential trading opportunities and make informed decisions about their own positions.

It is important to note that the COT report is not a perfect predictor of future price movements. However, it can be a useful tool for traders in making informed trading decisions.