Sep 24, 2024
As we do at the start of each week, in Monday’s Closer we recapped the latest positioning data from the CFTC’s Commitments of Traders report. In essence, this data highlights whether traders are in aggregate positioned long or short in various futures contracts. In the charts below, we show the historical net percentage of open interest net long (short) for gold and silver futures. Higher positive readings indicate that positioning is net long (more longs than shorts), while negative readings indicate that positioning is net short (more shorts than longs).
Last week’s data saw a number of big moves in commodity futures, but some of the most notable were in the precious metal space. For starters, silver rose to 41.5% net long. That makes for the most optimistic positioning since April 2017. As gold continues to trade at record highs, traders have gotten extremely long at 57.7%, which is a record high in this series dating back to 1986!
As shown above, last week’s record high in gold positioning isn’t the first of the year. So far in 2024, there have been five weeks with record highs. As shown below, that is the largest number of record highs since 2009 when there were six.
Again, the new high in gold positioning comes as gold itself is trading at record highs. In the chart below, we show the price of gold during the history of the Commitments of Traders data and plot each time that positioning was also at a record high. Of these occurrences since 2000, gold has usually been trending higher when gold long positioning reaches a record. That was also the case in the 1980s, albeit that was early on in the CFTC data’s history, and as such, back then the net long readings were significantly lower than they are now. The 1990s were a bit different as the strong reads on positioning came at a time when gold was sitting in a downtrend.
Sep 23, 2024
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Looking for deeper insight into markets? In tonight’s Closer sent to Bespoke Institutional clients, we begin by taking a look at the rough day for automakers and an update of Fedspeak (page 1). We also review the performance on new S&P 500 additions (page 2). Next, we take a deep dive into net worth data (pages 3 – 5). We finish with a preview of this week’s Treasury auctions (page 6) and positioning data (pages 7 – 10).
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Sep 20, 2024
Although the S&P 500 finished in the red on the day, there is one sector reaching fresh 52-week highs: Utilities. The Utes are one of only two sectors higher today (the other being Communication Services), and its leadership is by a wide margin. Whereas Communication Services is only up 0.17%, the Utilities sector is flying with a 2.58% gain.
That big gain is thanks to news that Constellation Energy (CEG) will sell power to Microsoft (MSFT) in order to power its data centers. To generate that power, CEG will be restarting one of its nuclear reactors at Three Mile Island in Pennsylvania. As shown below, given the news, CEG is the top performer in the sector today with an impressive 21% gain. Vistra (VST) has also benefitted and is up 14.3%. Those two stocks are now top performers on the year with total returns of 79.35% for CEG and 142.2% for VST. Of course, the Utilities sector is often considered an income friendly area of the market, but the surges in the price of CEG and VST have dramatically lowered their yields below 1%. That compares to an average yield of over 3% for all members of the sector. The only other Utilities stock with a lower yield is PG&E (PCG) which recently reinstated its dividend after a few rough years dealing with the fallout of being to blame for wildfires in the back half of the 2010s.
As previously mentioned, Constellation Energy (CEG) is at the center of attention today. As shown below, the over 20% gain today erased all of the declines since the spring, leading to a fresh record high. Additionally, today’s gain is the largest one on record since the stock’s inception following a spinoff of Exelon (EXC) in 2021.
Vistra (VST) has likewise returned to new all time highs on today’s surge, surpassing the previous record close from this past May. The 14.5% single day gain as of this writing is remarkable as there is only a single time that the stock rose by more, and that was on July 31st when it rose 14.8% as news of higher energy prices bolstered the Utilities sector.
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