S&P 500

22 Jun 2020 ‚óŹ 07:15 AM

The S&P 500 chart have been marked with 5 occasions when the net short position of manage money was high, a high or low position involves more than 2 million contracts in open interest as reported by the commitment of traders report. At the bottom in March we came close to that number.

snp 220620

However, even after what looks like a sporadic rally short positions by manage money traders have only gone up to crossed the 2 million mark. Previous occasions show that lead to multi-month rallies. At the tops sometimes more than 2 million contracts directly long as was the case at the 2018 top. This extreme negative positioning of course does not coincide with the daily sentiment index that had crossed 90% bullish a weak back. The DSI is probably a short-term overbought signal that gives us a correction or consolidation. The positions of manage money traders like hedge funds indicates the medium term sentiment that remains extremely negative and therefore counterintuitively is bullish for the market.

Long Short SPX

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