Look at what just hit an all-time record…
Asset Managers At Record Exposure
January 14 (King World News) – Jason Goepfert at SentimenTrader: There have been some notable extremes in recent weeks, especially related to real-money, near real-time reflections of leveraged, speculative trading activity. It’s happening in the options market, it’s happening in ETFs, and it’s happening in futures.
The weekly Commitments of Traders report segregates the position of traders by contract (stocks, commodities, etc) and function (hedgers, speculators, dealers). In recent years, the CFTC has made good attempts to provide more detailed information on the latter by introducing a Traders in Financial Futures report. It gives more information about who is doing what.
An interesting wrinkle in the latest report is that asset managers have established a record long position in S&P 500 (full and e-mini contracts), DJIA, Russell 2000 and Nasdaq 100 e-mini contracts. They are now net long nearly 30% of the open interest in those contracts. The previous record was just over 25% of open interest.
These money managers have gone net short, or nearly so, only a few times, and they were excellent buy signals. They’ve established big net long positions more often, and it was less consistent. Still, further gains after they became so bullish tended to be limited, and eventually wiped away during a subsequent pullback.
Below, we can see the S&P’s returns after any week when managers’ net index futures position was greater than 25% of open interest. The dates from the fall of 2006 *just barely* missed the cut and would have shown positive returns before, you know, they were wiped out by the greatest financial crisis in 80 years.
The only dates that show a positive return over the next 1-2 months were the ones from November. To be fair, the jury is still out on those.
Overall, the sample size is relatively limited in terms of unique occurrences, but it’s another sign that there were a whole lot of folks who are a whole lot of leveraged.
This is just one example of why Jason Goepfert is the best in the world at what he does — providing actionable market data. To subscribe to SentimenTrader CLICK HERE.
***Alasdair Macleod discusses the wild gold trading in gold this week, what to expect for gold, silver and the markets in 2020 and much more and you can listen to his powerful KWN audio interview by CLICKING HERE OR ON THE IMAGE BELOW.
Gold Will Go Through The Roof, Plus Highest In History
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