Via Deutsche:
Range bound US equities despite two large positive catalysts points to extended positioning
Back in July, we noted that the market then was rallying on good news (data surprises) but failing to selloff on bad news (virus resurgence) and that this asymmetric response confirmed our read that equity positioning was quite low (Equity Positioning Sticks Out, Jul 10 2020). We see the situation now as having reversed. The S&P 500 has essentially remained within its 3 month range despite two huge positive catalysts in the form of the resolution of US election uncertainty and the vaccine announcement, which has strong forward looking implications, while selling off on widely anticipated pandemic restrictions and disappointments on fiscal stimulus. This asymmetric market response suggests that positioning is now extended. Our quantitative indicators for positioning and flows reinforce this read.
