With the world feeling so extremely bearish, the contrarian in us has started to feel more excited by the day. There is no doubt price action in pretty much everything is horrible, but negative markets can also show violent bounces.
Being bearish the equity markets here is all but a unique view.
We have covered the crowded trades since this autumn.
The CTA index represents the biggest and most significant global “model” hedge funds. This rather important crowd used to track the SPX last year, but note that the CTA index (white) has “decoupled” from the SPX (orange) since December last year. The new “strategy” among these players seems to be net short the SPX.
It would be interesting to see how the “smart” models would react to a squeeze higher here.
The TRADPAUS index shows the percentage of NYSE stocks that closed above their 200-day moving average price line. The TRADPAUS index has of course collapsed as the markets have imploded since October. Do note that current reading of the index is rather extreme.
Since 2009 every major low in SPX (orange) has been accompanied with a new extreme low in the TRADPAUS index (white).
This is not an overall get all in long call, but merely a reminder that being bearish here is not a unique view.
Source; charts by Bloomberg