In Late 2006, the S&P 500 futures market traded around 1435 and the
commitment of traders was at an extreme net long position. The market fell
shortly after only to manage a miraculous rise in the face of hedge funds going
bust and an exploding and over-leveraged credit market. In mid-2008, the S&P
500 futures also traded around these levels, from where the epic collapse really
began. Six years later, the S&P 500 futures traders are the most
bullishly positioned they have been since those heady over-confident
days. Still believe the talking heads that there is money on the
sidelines waiting to be put to work? Still convinced that there will be some
epic rally if the 'fiscal cliff' fallacy is resolved? Positioning (real money)
trumps Sentiment (AAII surveys etc.) every day in our book. The Bernank
will be pleased at his success.
Chart: Bloomberg
Chart: Bloomberg
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