CMR Weekly Charts Review _ Sector Overview

A Review of All Sectors Covered by the CMR Process

Based on the latest Commitments of Traders data published by the CFTC (government agency that tracks trader positioning) every Friday, there are no markets that are crowded at maximum levels which would warrant tracking for a potential news failure event, entering a high reward/low risk trade and following risk management rules while fading Speculators. With that in mind, this week’s newsletter includes commentary on each sector covered by the Crowded Market Report, and was published this past Sunday, 02/26/2024. If you want to learn more about trader positioning, crowded markets, risk management and learning what it takes for long term success, click the link at the end of this post which also offers promotional discount codes to our memberships. Thank you for reading.

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Sector Review

Crypto:

COT would indicate this market can go a lot higher (written before today’s 7% move).  This of course coincides with the idea that risk assets are going higher.  This may actually be the best trend to go with as Large Speculators (blue column continue to short this rally). 

Equities: 

A bull market is defined as one that is going up, reacts well to what is seen as positive news, and does not react poorly to what is seen as bad news.  This is exactly what is happening in the equity markets right now, so until this changes, it is a bull market.  The thing to do in a bull market is to err to the long side.  What of the reversal day on Friday, which was led to the downside by the Nasdaq?  Yes, this could certainly be an indication that a top is in for a bit.  If looking to be short, this may be the marker for where to stop out.

Fixed Income: 

I do not know what it is, but it feels like people are hating on the bond market a bit too much now.   Notice the 30-Year Bond contract actually had a reversal week last week and closed up.  For no apparent reason.

Currencies:

As a corollary to the bond market and general psychology, and with some once sided positioning, I see the US Dollar as a better risk/reward sell than buy here. The chart below how the major currencies are positioned against USD.

Energies:

The draw of the low prices in NatGas could be a horrible trap.  I would avoid unless short-term trading it.

Metals:

The precious metals are most likely to be a leveraged bet on the Fixed Income moves.  Just look at Friday as proof of that concept.  While positioning is not crowded short here, it is also not crowded long.  The tape in Gold has certainly improved to the upside.

Grains:

A dangerous place to play here.  Chart breakdowns with theoretical chart support far away, and Small Speculators holding on with hope.

Softs:

Cocoa is a great way to see the theory that being contrarian participation and not price is the way to be properly contrarian.  While price and momentum have seemed overextended for a while now, positioning said not to short during this crazy rally.  This is a great market to study over the past couple of years to get a feel for how COT data can move unexpectedly and save one from getting in the way of a bad contrarian trade idea. 

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