Enhance your trading with a series of short videos on topics such as range bars, support & resistance, parabolics, price confirmation and much more. We also take a look at a weekly chart of the soybeans futures market.
1. Commitments of Traders: What are the Big Boys Up To?
By Jim Wyckoff
I have discussed in past articles how volume and open interest can be used to help identify and confirm market situations and trading opportunities. I'll take open interest one step farther in this column by examining the Commitments of Traders (C.O.T.) report, issued by the Commodity Futures Trading Commission (CFTC).
The C.O.T. report is released bi-weekly--every other Friday afternoon. There is also a C.O.T. report issued on the following Mondays that includes futures and options data. However, this report is not as closely followed as the Friday afternoon report that covers only futures, because the combined futures and options report has less history.
The CFTC requires futures traders and hedgers who hold market positions larger than the CFTC's required reporting levels to report their positions on a daily basis. This is how the C.O.T. report is derived.
The C.O.T. report breaks down by open interest large trader positions into "Commercial" and "Non-Commercial" categories. Commercial traders are required to register with the CFTC by showing a related cash business for which futures are used as a hedge. The Non-Commercial category is comprised of large speculators--namely the commodity funds. The balance of open interest is qualified under the "Non-reportable" classification that includes both small commercial hedgers and small speculators.
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2. Hot Market: Soybeans in Solid Uptrend, Hit 8-Month High
The soybean market bulls are in high gear heading into the U.S. planting and growing season. May soybean futures have just hit an eight-month high as prices are in a solid near-term uptrend.
However, something is amiss in the grains at present. Corn and wheat futures are languishing not far above their contract lows, while soybeans are in a solid uptrend. Something has to give soon.
Either the weak corn and wheat markets will pull soybeans down from their highs, or the strong soybean market will pull corn and wheat markets up from their lows.
It's not likely the diverging soybean, and corn and wheat markets, will continue for very long.
FN: May Crude Lt(NYM)
LT: May 2,5,10 Year Notes Options(CBT)
May Bonds Options(CBT)
May Canola Options(CBT)
May Wheat Options(CBT)
May Corn Options(CBT)
May Oats Options(CBT)
May Rough Rice Options(CBT)
May Soybeans,Soymeal,Soyoil Options(CBT)
* Please note that the information contained in this letter is intended for clients, prospective clients, and audiences who have a basic understanding, familiarity, and interest in the futures markets.
** The material contained in this letter is of opinion only and does not guarantee any profits. These are risky markets and only risk capital should be used. Past performances are not necessarily indicative of future results.
*** This is not a solicitation of any order to buy or sell, but a current market view provided by Cannon Trading Inc. Any statement of facts herein contained are derived from sources believed to be reliable, but are not guaranteed as to accuracy, nor they purport to be complete. No responsibility is assumed with respect to any such statement or with respect to any expression of opinion herein contained. Readers are urged to exercise their own judgment in trading!
RISK DISCLOSURE: Past results are not necessarily indicative of future results. The risk of loss in futures trading can be substantial, carefully consider the inherent risks of such an investment in light of your financial condition.