TechnoMeter

Our data shows a massive 83% of traders with open positions in the US 500 remain short, while positions on the Dow Jones-tracking ‘Wall Street’ contract stand at 85% short and FTSE 100 at a near-record 90% short.



The major caveat is nonetheless simple: price and sentiment extremes are, by definition, only clear in hindsight. If we look at past incidences of such one-sided positioning it seems clear they precede key turning points: the S&P 500 and Dow Jones reversed lower through early March when sentiment hit over 80% short (below 20% long). Of course sentiment remained at least 80% short for over a month as both indices continued onto fresh record highs. It remains impossible to identify the true sentiment extreme, and caution is advised against joining ‘the crowd’ as they sell into equity market gains.

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