S&P 500: net position collapsed from record highs

The Commodity Futures Trading Commission (CFTC) COT (Commitments of Traders) reports for the week ending on Tuesday last week showed:

Non-commercial large speculators decreased their net sell position on S&P 500 index mini-contracts by 89.6k contracts to 344.5k. This follows a period of 9 out of 11 weeks where they had been steadily increasing their net sell position, which has now reached record highs in the last 4 weeks.

Hedgers (COMMERCIAL) reduced their net buy position on the S&P 500 by 85k contracts, bringing it down to 350.5k. This decrease in net buy position follows a period of nearly 11 weeks of buildup, during which the net position had been reaching record highs for 4 consecutive weeks.

The open interest rose by 5 thousand contracts, bringing the total to 2.500 million.

The ratio of the number of sell contracts to the number of buy contracts for large speculators decreased by 0.99 over the course of the week, bringing it to a total of 2.33.

The CME's most popular instrument, the S&P 500 index mini-contract, has seen a sharp rise in bullish sentiment according to COT data. After a period of accumulation, traders have significantly decreased their net position on the decline of the S&P 500. Net position has dropped from its all-time high to its lowest level in almost two months. Large funds have increased their purchases of the asset by 38% over the week, while sales have also decreased. If this trend continues, it could lead to an increase in the S&P 500 index.

COT report data is essential for medium and long-term trading, and is mainly used by large speculators (non-commercial entities such as banks and investment funds) who tend to trade with the trend. On the other hand, hedgers (commercial entities such as operators and large companies) usually trade against the trend. The net position is the difference between the number of buy and sell contracts, and is represented by the blue line on the chart for large speculators, and the black line for hedgers. Open interest is the total of all open positions in the market.