0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
EUR/USD
Bullish
Oil - US Crude
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Wall Street
Mixed
Gold
Bearish
GBP/USD
Bullish
USD/JPY
Mixed
More View more
Real Time News
  • Canadian #Dollar Outlook: $USDCAD Five Weeks Down, Five Month Low - https://t.co/O1op1wYcdT https://t.co/GaYTjFmjtc
  • RT @C_Barraud: 🇺🇸 *PELOSI SAYS `MILES APART' ON SOME ISSUES IN #STIMULUS TALKS - BBG *PELOSI: `VERY FAR APART' ON MONEY FOR GETTING KIDS TO…
  • White House Economic Advisor Larry Kudlow: -Data suggests economy only needs 'targeted money' -Thinks economy is entering a 'self-sustaining recovery' -Trump 'completely opposes' bailing out states $USD $TNX $SPX
  • FTSE 100 IG Client Sentiment: Our data shows traders are now net-short FTSE 100 for the first time since Jul 20, 2020 when FTSE 100 traded near 6,264.90. A contrarian view of crowd sentiment points to FTSE 100 strength. https://www.dailyfx.com/sentiment https://t.co/iX4wB4HOah
  • Fed's Rosengren says the #Fed has been clear that negative interest rates are unlikely to be used
  • Back from vacation and back on schedule Going live for today's stock market webinar in 10 minutes - https://t.co/rmwDABTiN2 https://t.co/oC3Igu2muT
  • I've seen three more headlines today suggesting that there is significant money still on the sidelined despite the climb in markets. Is the assumption that some small tech milestone or new headline would excite investors to pay record amounts to get into a stretched market?
  • Forex Update: As of 14:00, these are your best and worst performers based on the London trading schedule: 🇨🇭CHF: 0.57% 🇪🇺EUR: 0.41% 🇨🇦CAD: 0.40% 🇳🇿NZD: 0.14% 🇬🇧GBP: -0.16% 🇯🇵JPY: -0.43% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/3mZjwCXcwc
  • Indices Update: As of 14:00, these are your best and worst performers based on the London trading schedule: FTSE 100: 2.39% France 40: 1.37% US 500: 1.29% Germany 30: 1.14% Wall Street: 0.97% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/3rljxp4YdZ
  • Heads Up:🇺🇸 Fed Kaplan Speech due at 15:00 GMT (15min) https://www.dailyfx.com/economic-calendar#2020-08-12
Positioning Across Stocks, Oil, Volatility Leverage Structural Risk

Positioning Across Stocks, Oil, Volatility Leverage Structural Risk

2017-02-25 03:58:00
John Kicklighter, Chief Strategist
Share:

Talking Points:

• While extremes on benchmarks like the S&P 500 and low expected returns flash caution, positioning is the real risk

• Shorter duration speculators are more active now, but duration investors refuse to throttle back despite risk-reward

• We look at positioning in equity and Treasury ETFs; leverage on the NYSE; oil, Russell 2000, VIX spec futures positions

See what live coverage is scheduled to cover key event risk for the FX and capital markets on the DailyFX Webinar Calendar.

Animal spirits have haunted the markets for some time. Despite glaring fundamental questions and frequently voiced skepticism across the financial spectrum, speculative benchmarks like the S&P 500 have continued to win record highs on a weekly basis. Motivation for this extension can vary from fundamental to technical, economic to opportunistic. Justification can come in different forms and stretch the imagination, but participation is an objective measure of performance. How many market participants are there in a market? What is the activity level of the active market participant? Is there conviction in exposure given the fundamental discrepancy on display? Answers to these questions, will give us a better understanding of the collective's motivations.

There is a remarkable level of agreement across the financial spectrum (from audacious speculator to cautious journalist) that sentiment has reached well beyond the bounds of reasonable pricing. Given the historically-low level of return in the financial system, the focus is increasingly shifting away from the 'income' stream of return to capital gains. That dissuades the long-term, buy-and-hold investor and attracts the short-term speculator. Such a focus creates an unstable backdrop for the market at large and leverages the sensitivity to developments that would shake 'traders' - namely volatility. We can see the shift in balance looking at the various measurers of positioning.

The use of leverage is a strong indicator of what type of trader holds the most influence. According to the NYSE's data, the use of leverage has extended well beyond the Dot-com or Subprime Real Estate bubbles over the past two decades. Beyond that, capital flows into and out of increasingly-popular ETF speaks to an appetite for certain assets. For months, capital has been steadily withdrawn from the equity-centered assets. In the Commitment of Traders (COT) figures from the CFTC, we find another facet of the same structural wall: an unstable appetite for stretched markets. The Russell 2000 contract has seen incredible volatility in exposure that contracts dramatically to price. Crude oil exposure has hit a record speculative high even as the commodity itself has struggled to make gains beyond 55. From VIX futures, we have seen the extreme reach down the risk spectrum has started to abate - the biggest pullback since the election. What is at stake and what will signal the turn of the tide? We discuss structural positioning as a measure of risk in this weekend Strategy Video.

Positioning Across Stocks, Oil, Volatility Leverage Structural RiskPositioning Across Stocks, Oil, Volatility Leverage Structural Risk

To receive John’s analysis directly via email, please SIGN UP HERE

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.