Three states for a daily futures advisor consensus

What the daily print records

A futures-specific consensus procedure compiles buy and sell recommendations from leading analysts and commodity trading advisors across about 36 markets covering grains, meats, softs, energies, currencies, indexes, and interest rates.

The same process also records those advisors' actual positions as an advisor-position-profile, a daily map of professional buying and selling.

The advisor-consensus-scale is a daily 1-to-100 reading of how bullish the monitored group is on a given market. A reading of 1 marks extreme bearishness and a reading of 100 marks extreme bullishness.

When the print is treated as informative

Market-sentiment study is presented as most informative when a market is near an apparent high or low that looks out of step with fundamentals, or when it shows a divergence on a key indicator.

It is not presented as most informative during trendless ranges, when informed and uninformed accounts can be equally undecided. During consolidations, informed accounts may use lower volatility to accumulate or distribute. A market that is not trending is treated as a period to wait rather than to force a sentiment trade inside the range. That waiting stance is range-abstention.

Stay aligned until a long-horizon extreme

Because many commodity trading advisors follow trends, a rising share of bullish advisor readings in a market where a participant is already long is framed as a check that the position is aligned with the prevailing move. The suggested use is to let the consensus trend with the market while that alignment holds.

The same scale can be read in a contrary way by locating unusually stretched markets and then monitoring price charts or fundamental reports for a break from that overbought or oversold condition. Readings under 20 and over 80 are generally treated as oversold and overbought guideposts rather than automatic action levels. The trend in the rating is described as sometimes as important as the level itself.

Contrary-after-long-horizon-extreme waits until a consensus series makes a long-horizon extreme, such as a 24-month high or low in a commodity's reading. After that point a contrary opinion is described as more likely, and a close or reverse is framed as more timely to consider.

A dollar and pork-belly window

On 29 April 2003 the US dollar consensus stood at 23 against a 51.3 average across 31 futures markets, then fell to 14 by 27 May, the most bearish rated contract. Continuous dollar futures moved from 98.62 to 93.23, and an intraday low of 92.37 printed on 16 June after about two further weeks.

Over the same window pork-belly consensus rose from 75 on 29 April, when continuous futures closed at 76.475, to 85 on 27 May, when they closed at 84.850 and held the highest rating among the rated commodities. The contract then peaked about five days later at 88.525.

TradersWeek editorial note: in that window the dollar became a bearish sentiment-extreme while price continued lower, and the pork-belly contract held the most bullish rating while price continued higher before a nearby peak. That pairing is a stay-aligned illustration, not a rule to fade every stretched print.

An indirect ranking without a dedicated series

When dedicated futures sentiment series are uncommon, a commitment-of-traders-breakdown of commercial traders, large speculators, and other groups is often parsed as an indirect ranking of which markets look more bullish.