Loading ...Finally, several indicators point to stretched positioning across other metrics. For example, equity futures long positioning for asset managers and leveraged funds combined is at record highs, driven by a broad-based rise in longs across the S&P 500 and Nasdaq as well as the small-cap Russell 2000 futures.
Longs in EM futures have risen to record highs.
And short interest in single stocks is near record lows; and that in ETFs has also fallen to a new low.
One last confirmation of what appears to be a bullish capitulation into the QE4-inspired melt up is that equity fund flows have also turned up strongly over the last 3 months. Almost $50bn came in over this period, compared with over -$300bn in outflows in the prior 10 months.
Oh, one more thing we almost forget: with institutions, retail investors and algos all in stocks, the biggest source of equity demand, corporations themselves, appear to be easing off the stock buyback pedal. Indeed, awhile there has been a flurry of recent buyback announcements…
… with tech names leading by the runner up, healthcare, by nearly 3 to 1 in buyback announcements…
… in the grand scheme of things, and on a rolling 3 month basis, stock buybacks are a far cry from where there were just two years ago, and fading fast to levels not seen since before the Trump tax reform which unleashed a $1.5 trillion buyback bonanza.
It is this sudden reversal in buyback appetite that may be the biggest danger for a market where 77% of CFOs now think the market is significantly overvalued.
call/put volume ratios are at the top of their historical range;
