The read
Last week the equity short split in two. The S&P 500 and Russell 2000 covered while the Nasdaq-100 short went deeper. This week the split closed. Leveraged funds covered across all three index contracts, and the largest single move in the report came from the front end of the curve, where 248,236 SOFR contracts were bought back in one week. The positions that did not move were the currency shorts.
The anchors
ES · CL · GC
ES
Net short 302,372 contracts, or 15.1% of open interest · z +1.78 · COT Index 65.3 · 1-week flow +26,942 · 4-week flow +60,227A second consecutive week of covering. The headline short is still large, but it has now shrunk by 60,227 contracts in four weeks. Index futures positioning carries substantial hedging flow, so the direction of travel matters more here than the absolute number.
CL
Net long 108,307 contracts, or 4.3% of open interest · z +0.74 · COT Index 40.1 · 1-week flow +21,402 · 4-week flow +14,594WTI woke up. A third straight week of buying moved the regime from Neutral to Building Long, and the one-week flow was larger than the whole four-week change. Open interest contracted while the position grew.
GC
Net long 120,328 contracts, or 24.4% of open interest · z +0.13 · COT Index 50.1 · 1-week flow -3,258 · 4-week flow +3,511Gold gave a little back after two weeks of accumulation and sits almost exactly in the middle of its own recent history. There is nothing stretched here in either direction.
The turn
The positions behind this week's read
The move this week
The equity adjustment stopped splitting.
The Nasdaq-100 short, which deepened last week, reversed. Leveraged funds covered 13,627 contracts, taking the net position from 90,587 short to 76,960 short. The standardized reading rose from -2.27 to -1.66 and the COT Index moved off zero to 12.8. The regime left Extreme Short and became Accumulating. The position is still 24.1% of open interest, so this is a step back from the edge rather than a reversal.
The S&P 500 covered a further 26,942 contracts and the Dow Jones position covered 5,592 and crossed to net long at 2,141 contracts. Both now carry new alerts on the long side of their own recent range, which is a different statement from being long in absolute terms.
Four things that moved
The changes behind the headline.
SOFR 3-Month
Leveraged funds bought back 248,236 contracts in one week and 497,960 over four, lifting the net from 2,694,174 short to 2,445,938 short. The standardized reading moved from -2.19 to -1.74 and the regime left Extreme Short. This was the largest flow in the report and the second straight week of covering.
Nasdaq-100
Leveraged funds covered 13,627 contracts after adding 10,264 shorts the week before. The COT Index moved off zero for the first time in three weeks.
Corn
Managed money bought 75,490 contracts in one week and 214,608 over four, taking the net to 168,399 long at a COT Index of 73. A fifth consecutive week of buying, and the pace is still accelerating.
VIX Futures
The position shed 15,387 contracts and crossed from 3,098 long to 12,289 short. The regime moved from Building Long to Distributing as the equity shorts were being covered.
Positioning extremes
Where the crowd is stretched.
Who is on the other side
The Nasdaq short has one clear counterparty.
- Leveraged funds-76,960
- Asset managers+77,740
- Nonreportables+17,958
- Dealers-17,800
- Other reportables-938
Leveraged funds hold the visible short while asset managers hold almost exactly the offsetting long. Open interest expanded while the short was being covered, which means the two sides grew into each other rather than one side simply leaving.
That structure is why the covering matters. A short being reduced against an expanding book is a different signal from a short being closed into a shrinking one.
The contradiction
The rates complex disagreed with itself.
While the front end covered, the rest of the curve went the other way. The 10-Year T-Note sold 90,934 contracts, extending a four-week change of 185,888, and the regime moved from Neutral to Flip Zone at +0.04. The Ultra T-Bond covered 36,527 contracts yet its regime still moved from Accumulating to Building Short.
The currency shorts held and in two cases deepened. Euro FX added 8,527 shorts for a sixth consecutive week of selling at a COT Index of 0, the most stretched reading in the book. The Canadian dollar added 4,118 and the Japanese yen added 5,805. The Swiss franc entered the alert list for the first time.
One week later
How last week's extremes are tracking.
- SOFR kept unwinding. A second week of covering, and the largest flow in the book.
- The Nasdaq short stepped back. Last week it added 10,264 shorts. This week it covered 13,627 and left the extreme.
- Euro FX held again. A third consecutive week at a COT Index of 0, and the short still grew by 8,527.
- The Canadian dollar deepened again. Another 4,118 shorts, taking the reading from -2.53 to -2.56.
- Live cattle kept selling. Managed money removed 8,840 more longs, and 52,780 over four weeks, though the position is still net long 66,523.