Shorts Gasp for Air: Tech Outflows, Utilities Surge, Semis Lose Steam, and Gold Breaks Out

Shorts dying

Shorts dying a slow death. Chart shows QQQ/SPY short interest as a % of shares outstanding.

Source: JPM

Back to neutral

The JPM Tactical Positioning Monitor (TPM) shows a 4wk change that’s back to neutral, but still far from the +1.5z or higher levels that it’s reached many times in the past few years. In line with this, the level of positioning has increased from +0.1z in late Apr to +0.7z most recently (82nd %-tile), though still below +1.05z in late Mar (>90th %-tile).  

Source: JPM

Meme positioning

Positioning is at its highest level since mid-2022 (i.e., the least net short as L/S ratio still <1). 

Source: JPM PI

Global semis positioning

Pull-back from March highs but long-term trend still positive.

Source: JPM PI

Semis excitement "gone"

Options markets are pricing much less excitement in semis these days. Note just how flat SMH upside skew is. Recall those crazy inflows back in March...(chart 2).

Source: Spotgamma

Source: Bloomberg

Problems in tech land?

This is the 1st back-to-back tech outflows since Apr’23.

Source: BofA

Utilities flow mania

Playing the contrarian utilities long is a late trade. The crowd has been forced to chase this "forgotten" sector.

Source: BofA

Golden volatility

As we pointed out last week (here): chase gold via relatively "muted" gold upside calls. Volatilities remain rather attractive should gold break out to the upside.

Source: Refinitiv

Dirt cheap

Daily straddles are very cheap. We outlined our general view on volatility earlier today, see here.

Source: GS

Massive error

Albert Edwards with a rather aggressive tone: "I believe the Fed is sowing the seeds of yet another policy disaster. Having let the inflation cat out of the ‘transitory’ bag, it now seems determined to regain its credibility by driving CPI inflation all the way back down to its 2% target. This has led to a huge divergence between goods and services inflation. This policy error is the mirror image of the mistake the Fed made after the 2008 Global Financial Crisis, the very mistake it was castigated for by former Fed Chair, Paul Volker, back in 2018."

Source: Soc Gen

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