Large-scale CTA buying activity may have supported Platinum markets last session, but signs of buying exhaustion could now morph into selling activity, TDS Senior Commodity Strategist Daniel Ghali notes.

Palladium may still jump higher

“Prices will now have to rally towards $995/oz to keep CTAs from shedding some of their recently added length, and a big downtape over the coming week could spark massive CTA selling activity totaling up to -40% of the algos’ max size.”

“That being said, there are still some scenarios for the coming week that could result in continued buying activity from algorithmic trend followers, but the set-up for flows is already pointing to extreme downside asymmetry.”

“The set-up in Palladium, on the other hand, is nearly symmetric, with a big uptape still likely to catalyze large-scale buying activity from algorithmic trend followers. This is particularly notable given that our gauge of discretionary trader positions suggests that this cohort has now already reestablished its near-record short position.”