- Equities: There are currently 5,780 net long contracts on the Chicago Mercantile Exchange (CME).
- Oil: There are a near-record 208,226 net long contracts on the NY Mercantile Exchange.
- Gold: There are a near-record 253,528 net long contracts on the Commodity Exchange (COMEX).
- Copper: There are a near-record 25,139 net long contracts on the COMEX as well.
- Silver: Not a record or a near-record but still a significant 42,556 net long contracts on the COMEX.
- Australian dollar: 49,743 net long contracts on the CME. Canadian dollar: Not as large as Aussie but still high net speculative long exposure, at 21,579 contracts.
- Euro: Huge net speculative long position of 35,879 contracts on the CME.
- The 10-year Treasury note: It now has a net long position of 15,781 contracts on the Chicago Board of Trade (CBOT).
- The 5-year T-note: It is most exposed with a net speculative long position of 167,729 contracts — of course, this is the part of the curve the Fed is targeting.
- The 2-year T-note: It commands a net speculative long position of 43,220 contracts even with a yield that recently was 30 basis points north of zero.
- The 30-year bond: It is the only maturity with a net speculative short position — of 1,917 contracts.
- It may pay for the time being to avoid the areas of the market where net speculative long positions exist and is in the process of unwinding
- Volatility: With the risk-on trade in full force for the past two months, the VIX futures has a net speculative short position of 13,345 contracts, which is at the high end of the historic range.
- It would involve a flattener in the bond market;
- Although we are still long-term bullish on the commodity space, looking at the position in the COT report, selling calls for protection in the commodity space could be a sound strategy. Expect silver to outperform gold still;
- Going long the U.S. dollar against the euro, but within the resource-based units, look for the loonie to outperform the Aussie;
- Look for the S&P 500 to now trade down to the low end of the 14-month long 1,000-1,200 range;
- Buy volatility, which is inexpensive and underexposed on the CBOE, which is bullish.
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