The Market Ear with more on how far the bear market rally has run to correct market positioning.
Short covering getting extreme |
Short covering getting extreme as net US hedge fund flows turn positive. JPM writes: “…the short covering has been the main driver of late and is now one of the most extreme in the past 5 years on a 20d basis (-3z). The covering has pushed net flows into more positive territory as well.” |
JPM PI | |
Sucking people in |
Low volume, poor liquidity market continues sucking people in. Good luck explaining to the boss you missed the entire squeeze and continue to “believe in your shorts”. The post CPI print px action is well described via Goldman’s prime book: “…the overall US Prime book saw the largest $ net buying in more than 3 months (1-Year Z score +1.8), driven by long buys as well as short covers….Info Tech stocks saw the largest $ net buying since 6/24 (Z score +1.1)”. We are getting closer… |
GS PB |
GS PB | |
It will squeeze until… |
According to Citi we will squeeze until: 1. Fed “reasserts itself and is forceful in its pushback to looser financial conditions” 2. the overall economy starts to get weaker which will feed into lower EPS expectations | |