Does This Historic Signal Lead a Historic Rally or Historic End?
Let's start by acknowledging that over the past several years there ALWAYS seemed to be a crash just around the corner. Meanwhile, the SnP500 keeps marching up and everyone who was right about the fundamentals are left with a glass of Disbelief on the FOMO rocks.
Follow the Money
If we compare the recent Commitment of Traders futures report to the historical averages of 2019 to 2020, it shows that Hedge Funds are getting out of the VIX and moving money primarily into long positions on the SnP500, Energy, Financials, and Emerging Markets.
Below are their futures positions % change against the averages:
----------------------Long----------Short
S&P Energy ......+71.15%.......-23.44%
S&P Stock.........+19.56%.......-2.98%
S&P Financials....+73.75% .....-26.98%
Emerging ..........+24.63%.....+6.88%
VIX..................-49.87%...... -7.04%
Technicals
The report also showed that Asset Managers recently dumped D X Y (dollars) for similar positions in the aforementioned markets, Hedge funds were mostly neutral in D X Y positions. This reflected in what we saw last week and now the technicals point to a relief rally could be coming in the intermediate term. After that, the momentum of the macro trend should follow through to the longer term target.
The Gold/Silver market did not rally much on this recent dump in the D X Y because I imagine experienced traders can see that the risk of a dead cat bounce is increasing. Patience would pay off in this case. Should this play out then we can map out the most likely path of corelated markets using fibonacci extensions.
Crude Oil also did not rally on the recent D X Y plunge.
All in all, money has to go somewhere. Bonds are overcrowded and the Dollar is falling so select stocks are filling the void. Therefore a major crash right now seems unrealistic. If oil starts spiking, THAT's when a real crash is imminent. Until then it's just going to be click bait news injecting fear.
I like commodity producers + international growth and dividend stocks. As mentioned on previous articles I have been building core positions there and am now waiting for the D X Y to have a last gasp rally and an amazing opportunity to buy the dip it creates in the markets.
Trading is risky, don't listen to me.
Follow the Money
If we compare the recent Commitment of Traders futures report to the historical averages of 2019 to 2020, it shows that Hedge Funds are getting out of the VIX and moving money primarily into long positions on the SnP500, Energy, Financials, and Emerging Markets.
Below are their futures positions % change against the averages:
----------------------Long----------Short
S&P Energy ......+71.15%.......-23.44%
S&P Stock.........+19.56%.......-2.98%
S&P Financials....+73.75% .....-26.98%
Emerging ..........+24.63%.....+6.88%
VIX..................-49.87%...... -7.04%
Technicals
The report also showed that Asset Managers recently dumped D X Y (dollars) for similar positions in the aforementioned markets, Hedge funds were mostly neutral in D X Y positions. This reflected in what we saw last week and now the technicals point to a relief rally could be coming in the intermediate term. After that, the momentum of the macro trend should follow through to the longer term target.
The Gold/Silver market did not rally much on this recent dump in the D X Y because I imagine experienced traders can see that the risk of a dead cat bounce is increasing. Patience would pay off in this case. Should this play out then we can map out the most likely path of corelated markets using fibonacci extensions.
Crude Oil also did not rally on the recent D X Y plunge.
All in all, money has to go somewhere. Bonds are overcrowded and the Dollar is falling so select stocks are filling the void. Therefore a major crash right now seems unrealistic. If oil starts spiking, THAT's when a real crash is imminent. Until then it's just going to be click bait news injecting fear.
I like commodity producers + international growth and dividend stocks. As mentioned on previous articles I have been building core positions there and am now waiting for the D X Y to have a last gasp rally and an amazing opportunity to buy the dip it creates in the markets.
Trading is risky, don't listen to me.
Comment:
This MACD divergence shows there is little momentum on this last swing down and often precedes a reversal.
