While I was scanning the Commitment of Traders report over the weekend as I always do, there was one thing that jumped out at me from all of the various reports.
For the mini S&P futures contract, large speculators are net long over 250,000 contracts for the first time since March 2009.
As you probably know, March 2009 was a pivot point in the market as it marked the end of the bear market that had gripped stocks for 16 months.
Now we are in a bull market that has been going for approximately 18 months.
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One big difference between now and 2009 is the sentiment toward the overall market.
Back then the Investors Intelligence ratio was among the lowest readings of the past 10 years, the CBOE Volatility Index (VIX) was four times higher than it is now and Consumer Confidence was at a 20-year low.
Flash forward to now and we see the Investors Intelligence ratio above 2.5, the VIX below the 15 level and Consumer Confidence is at a four-year high.
Sure, the circumstances are at extreme opposite ends of the spectrum, but that doesn’t mean we won’t see a similar outcome.
We could still see the extreme net long position mark a turning point in the market, it just might be that it marks a market top instead of a bottom.
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