FAST FIVE: How Are Traders Positioned Ahead Of The Fed?
Despite these concerns, the markets remain within reach of all-time highs as the market continues to ignore the risks under the assumption “this time is different” and the Fed will indeed “come to the rescue.” Will that be the case.
This makes sense considering that prices are affected by the actions of both buyers and sellers at any given time.
Therefore, as shown in the series of charts below, we can take a look at their current net positioning (long contracts minus short contracts) to gauge excessive bullishness or bearishness. With the exception of the 10-Year Treasury which I have compared to interest rates, the others have been compared to the S&P 500.
While oil prices could certainly fall below $40/bbl for a variety of reasons, the recent bottoming of oil prices around $45/bbl should provide some reasonable support (barring an economic recession.) US Dollar Extreme Recent weakness in the dollar has been used as a rallying call for the bulls.
This will accelerate if there is a”risk-off” rotation in the financial markets in the weeks ahead.” Both things occurred.