PremiumThe Liquidation Is Over: CTAs Are Now Short $10BN After Selling $193BN In 2 Weeks
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Two weeks ago, when the S&P was just shy of all time highs, we warned our subs that "CTA Liquidations Had Begun: Up To $193 Billion For Sale." What happened next may feel like a blur, but it has been on par with the most brutal selloffs in post-covid history (if not worse), and that was to be expected: after all, when arbitrary mechanistic selling is engaged - ignoring any and all fundamental signals - and unwinding all post-election gains and then some as the Nasdaq promptly tumbled into correction.
Fast forward to last Friday, when we observed the latest positioning across the CTA community and noted that the selling was almost over, or as Goldman said, "CTAs have sold 47bn global in the last week. Our calculations show 1w flat tape = 40bn to sell // 1m flat tape = 43bn to sell. That means that with spot here, this technical supply will be largely finished by next week."
