Tech Turns, Shorts Burn: The Tactical Rally Is On
Above it again
SPX is breaking above the short term trend line, taking out the 21 day moving average today. We haven't had a "proper" close above it since the sell off started in late March. 5500 is the big short term resistance to watch. A close above it and things risk becoming frustrating for the many shorts...
Source: Refinitiv
New in tech
NASDAQ closing above the negative trend line that has been in place since ATHs, trading "well" above the 21 day. Next bigger resistance at the 50 day, currently around 19860.
Source: Refinitiv
Not so soggy
Soggy SOX trading above the 21 day moving average and the short term trend line. Soggy SOX turning sexy?
Source: Refinitiv
Lowest since Liberation Day
VIX has not closed here or lower since Liberation Day.
Source: Refinitiv
Healing
Equities need more time to "heal". VIX is still elevated, but the gap vs SPX shows things are "healing". Chart: SPX vs VIX (inv).
Source: Refinitiv
Playing the tactical rally
GS weighs in: "With signs of trade war de-escalation starting to emerge, light positioning (US L/S net leverage remains near 5-year lows), and market technicals improving , the case for playing for an equity market rally is getting stronger tactically". Chart shows US Fundamental L/S Net leverage and aggregate long/short ratio near their respective five-year lows in the 0th percentile."
Source: GS PB
Keeping tech bears up at night
Positioning is extremely bearish. Goldman's Lin: "Info Tech is among the most net sold US sectors in April MTD, driven by short sales outpacing long buys. Net exposure in Mag7 is now at 2-year lows and well below 5-year average in the 25th percentile, while the group’s aggregate ratio has fallen to the lowest level in more than 9 years".
Source: GS PB
Shorts on the rise
Notable pick up in short interest, especially in SPX. Chart shows short interest as % of shares outstanding.
Source: JPM
Possible support?
AAII bull-bear spread has remained depressed...
Source: Refinitiv
Happy to move
Sell low, buy high dynamics in full play among the net short gamma crowd.
