According to last week’s Commitment of Traders report for S&P 500 futures contracts, small speculators are the most bearish they have been in over nine years.
The reason I phrased it that way is because I have access to data as far back as January 2006, and from that point forward the group has never been more bearish.
The raw numbers show 95,812 contracts held short and 40,448 held long which translates to a net short position of 55,364 contracts.
Conversely, the commercial hedger group is net long 43,676 contracts which is the biggest net long position by this group since September 2011.
Always one to try to look at every angle, I also looked at the COT report for the mini-S&P 500 contracts and what I found there was just the opposite.
Small speculators are net long 389,992 contracts and commercial hedgers are net short 296,079 contracts.
At first glance, I thought the small speculators might be buying the mini contracts and then hedging by selling the big contracts, but that math doesn’t really work. The big contracts are five times the size of the small contracts.
If we take the number of mini contracts net long and divide by five, we get approximately 78,000 contracts.
Remember, the small speculators are net short 55,364 big contracts, so the math tells us even if they are hedging the bulk of their positions, they are still showing a significant net long position.
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