The COT report is issued on Thursday evenings by the Commodity Futures Trading Commission. What it does is break down the amount of buying and selling done by three groups: Commercials, Large Traders, and Small Traders.
The largest powers in the marketplace are the Commercials. These are the large users and producers of the commodity. They do not use the commodity markets to speculate or directly make money in the markets. They are producers and users of the commodity, so they sell forward or hedge their production/demand. They use the markets for selling and delivery, not speculating.
In this next chart we’re looking at the percent of Commercials Long Position in S&P500. Please look at the white vertical line in the chart, when the percent of Commercial Long Position are close at 53% it means the Commercials have been doing a relative large amount of selling.
Since 2009 a minimum level of the indicator was followed by a market crash 2 out of 3 times.
Now the indicator is at a minimum level…
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