Traders are growing increasingly confident that U.S. stocks are headed for a selloff. But history shows the opposite is more likely, according to an analysis by one macro strategist.
Speculative traders are more bearish than at any time in the last decade, according to the latest release from the Commodity Futures Trading Commmission’s weekly commitment of traders report, which tracks futures-market positioning in a number of currencies, commodities and U.S. equity indexes. Over the last 25 years, outsize short positioning in futures has typically served as a counter-indicator, according to Brent Donnelly, a global macro strategist at Spectra Markets.
At the same time that short positioning has been growing, sell-side equity strategists across Wall Street have become increasingly pessimistic, advising clients that the S&P 500 might finally be poised to break lower after rising more than 7% since the start of the year, according to FactSet data. Sean Darby, chief global equity strategist at Jefferies, told clients in a note shared with MarketWatch on Tuesday that he too expects U.S. stocks to retreat, based on movements in bond and commodity markets.
To be sure, signs of stress have been creeping back into the market. Over the past week, market-leading megacap technology names like Microsoft Corp. MSFT and Apple Inc. AAPL have seen their lead start to slip. Partly as a result, the Nasdaq Composite COMP has fallen during five of the last six sessions through Tuesday’s close.
Yeah. And from 2011-2022 we were in ZIRP, bubblicious fantasyland
Lol… it depends on who is placing the bearish bets.
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