What is a COT Index & 3-Year Percentile Ranking?

1. Normalizing Historical Ledgers

Raw contract numbers fluctuate over time as market participation grows. A COT Index normalizes these raw values into a standardized percentile:

$$\text{COT Index} = \frac{\text{Current Net Position} - \text{3Y Minimum}}{\text{3Y Maximum} - \text{3Y Minimum}} \times 100$$

2. Identifying Market Extremes

• COT Index > 80%: Managed Money is heavily long, indicating bullish momentum but warning of potential buyer exhaustion.
• COT Index < 20%: Managed Money is heavily short or liquidated, signaling extreme bearish sentiment and high short-squeeze potential.