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SH and Commentary


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#1 OEXCHAOS

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    Mark S. Young

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Posted 06 April 2020 - 09:01 AM

SH04-03-20.gif

From last night's letter:

Conclusion
Last week, I said that FinTwits had a record Fundamental Bears, despite a respectable rally. This week, there are more, still. I was particularly heartened last week by the the SH (the Short S&P ETF) getting and absolute ton of net new shorting. This week, it's even crazier. The SH reported $174MM in net new shorting on Friday--That's a Buy. The 7-day is at $1.09 BILLION (a record) and the 21-day is at $1.743 BILLION (also a new record). People are betting big on a test of the lows, and that suggests to me that we have higher prices ahead. This is huge fuel for a rally if we get some good news. We need to be careful, because this is still a Bear Market Condition, but with so many Bears and so much Shorting, if we got the right trigger, I can easily see a run at 2725, and I could even see a run to 2950, and that's while still allowing for a test of the lows thereafter. I will be nimble going forward and if I change the weekly I will advise by special alert.

Coronavirus Update: My Wealthy Country Index of Confirmed Cases showed relatively modest increases in new cases for the entire week and even the US saw a continued mellowing of the growth rate. Even more interesting is that Sweden, which has been open for business, has seen three days of declining new cases and deaths. This isn't enough, yet, but it is good news. I am still thinking that more testing capacity is likely to be the trigger for opening up the economy again. If that happens, look out above.


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#2 Darris

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Posted 06 April 2020 - 07:52 PM

4th highest single day net add across all short proshares etfs that are tied to the 5 major markets in the last 8 days.  $1.25 billion today for a net 8 day total of $10.3 billion (1x,2x,3x for Dow MID NDX RUT/SML and SPX).  Some funds saw no adds, but surprised not one dollar of redemption's.  SH light at $5 million.



#3 nacho

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Posted 07 April 2020 - 10:33 PM

Are these funds being used as an alternative to buying option protection in the current environment? Since the premiums on options are elevated, maybe it makes more sense to hedge with these funds. I guess if large entities were doing this, then the big $ spikes in the data could be a result of these big fish?


Edited by nacho, 07 April 2020 - 10:38 PM.