For the past two weeks I have been observing a divergence from what has been a fairly reliable pattern involving the Swap Dealers and the big Commercials (Producer/User/Merchant/Processor) category. I remarked about this last week in my comments and mentioned that we would be watching to see if this divergence looks like it might be more than perhaps a one or two hit wonder.
This week’s report now shows the 3rd consecutive week in which the Swap Dealers have gone the opposite direction of the other big commercials. What makes this so noteworthy is that by simply looking over the chart, you can see that for the most part these two giants have been pretty much marching in lock step with each other. As the net short commercial position increases, the swap dealer net short position generally increases as well. When it decreases, so too does the Swap Dealer’s. (more)