Sunday, October 15, 2006

The Commitment of Traders Report

"The Commodity Futures Trading Commission (CFTC) provides inside information about purchases and sales of futures contracts. The largest players in each market are required to disclose their positions to the CFTC on a daily basis and this report is released weekly on Friday afternoon (the reporting requirement varies by commodity). These traders are separated into Commercial Hedgers and Large Speculators. "

"The positions of Small Traders are calculated by subtracting the total of contracts held by the reporting groups from all the contracts outstanding (Small traders are not required to report their positions). Commercial Hedgers hold a significant informational edge over other traders as far as fundamental supply-and-demand statistics are concerned. They tend to be early, but they are usually right on the long run, quite contrary to the small traders. Extreme divergences in long and short positions of small traders, large speculators and commercial hedgers have proven to be reliable indicators of important trend changes. In such cases it is not advisable to bet against the commercial hedgers. All other patterns are meaningless."

Source:
Wall Street Courier

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