Dec'23 Trader positioning update

S&P, VIX, NASDAQ, Euro, Bitcoin, Oil

Disclaimer: The information contained in this article is not and should not be construed as investment advice. This is my investing journey and I simply share what I do and why I do that for educational and entertainment purposes.

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Happy Friday!

Folks, I am just sending over a quick update on positioning data from the CFTC’s Commitment of Traders Report that just came out. I did this the last time in mid November, so this update comes a bit sooner than usual. Given extraordinary market dynamics, I was very curious how this has changed positioning and I wanted to share some of my key insights. I believe there is a strong case for a near-term market correction.

S&P

S&P futures and options traders have increased their exposure into this rally to 420k contracts which is equivalent to a notional amount of $96bn. This is an elevated level that is typically persistent in bull markets. It’s not necessarily a worrisome signal, but it suggests that upside is limited. At the beginning of this year, traders were short 200k contracts. Hence, this has been a $150bn tailwind over the past 10 months.