The Commitments of Traders (COT) is a weekly market report issued by the Commodity Futures Trading Commission (CFTC) listing the positions held by commercial traders and the “Smart Money”, the hedge funds and bank institutions in various futures markets in the United States. Since the COT measures the net long and short positions held by speculative traders and commercial traders, it is a great resource to gauge sentiment in the Markets.
The infamous two and ten-year Treasury yield turned negative for the first time in a decade. The U.S. curve has inverted before each recession in the past 50 years. It offered a false signal just once in that time. However, typically the equity markets continue to climb higher…before they crash.
The chart below shows that after the “V” shape recovery, despite the S&P 500 reaching new all-time highs, the Smart Money is no longer as bullish.
The chart below has confirms the chart as the Smart Money has reduced their net long positions by over 100,000 contracts.
Based on the Commitment of Traders, although S&P has made new all-time highs in 2019, it appears the Smart Money is less bullish and has taken money off the table and well, you should do the same if your portfolio is concentrated in the US equity markets.
This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.