According to the COT report, spreading figures are defined in the following way:
"For the futures-only report, spreading measures the extent to which each non-commercial trader holds equal long and short futures positions... For example, if a non-commercial trader in Eurodollar futures holds 2,000 long contracts and 1,500 short contracts, 500 contracts will appear in the "Long" category and 1,500 contracts will appear in the "Spreading" category"
Look at the chart below:
source: Simple Digressions and the COT data
The circle marked in red points to the last spreading figure. It can be easily spotted that this week (the report was dated June 20) this figure was standing at its highest reading in history - as many as 8.6% of big speculators trading copper futures was very uncertain about future copper prices.
In my opinion, it is a very reliable data to take a position in the copper futures market. The only question is this: what position? Long or short?
Well, it is hard to say - spreading figures cannot help here. What I know nearly for sure is that a big move in copper prices is in the making.
The validity of this signal is additionally strengthened by the total open interest in copper futures:
source: Simple Digressions
As the chart shows, the total open interest is close to its highest readings now. Therefore the message is this:
- the copper market is ahead of a big move
- due to a very high open interest in copper futures (there is a vast amount of traders on this market), this big move should be additionally supported
- the problem is that the direction of this move is unknown