I totally get why traders are bullish right here, but man it’s getting awfully crowded on the bull’s side of the boat!
One of our weekly to-dos is to track futures speculators’ positioning among various currencies, commodities and stock indices.
Here’s the current net positioning among “asset managers” for S&P 500 futures (green bars = net positioning, white line = S&P 500 Index):
Here’s the current net asset manager positioning (red bars) for the S&P 500 Volatility Index (VIX):
And allow me to throw in the present short interest (blue line) for SPY (S&P 500 tracking ETF):
So, the huge net long position on S&P futures, along with the strikingly low short interest for SPY (hardly anybody betting on a near-term market dip) says that traders see nothing but blue skies ahead. The net short level for the VIX (a level we haven’t seen since the moment before the market plunged 10% in January ’18) says traders see virtually no near-term volatility.
This, frankly, is a contrarian’s dream setup (imagine the rush to the other side of the boat [the selling] the moment the bulls’ toes get a little wet!). Although, as we’ve been reporting herein, this market — bolstered by tweets and out-of-the-blue positive comments on trade talks — has been brutal of late to the short sellers.