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We are in a very tough trading environment

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Stuka II joined discussion · Aug 2, 2021 04:12
We are in a very tough trading environment
We are in a very tough trading environment. There is not much edge being provided by options flow, indicators, and entries. With indices, specifically $S&P 500 Index (.SPX.US)$, continually pushing to new highs in a healthy matter, one would think that all names are moving the same way. However, that has not been the case, there is still no full participation in the market. We have seen rotation continually into and out of specific sectors. Usually, these types of Fed-induced bull markets end poorly.

With this tricky atmosphere, we continue to emphasize that the best way to stay involved in the market is to play very tactically and play short-term signals such as tactical sentiment.
source: sentimentrader
source: sentimentrader
Upon the sector sentiment, as the chart is shown above, nothing much changed here, we currently have no bull signals flashing.
Hedge fund exposure source: sentimentrader
Hedge fund exposure source: sentimentrader
The only thing that is looking bearish is hedge funds because they are fully gassed up on the long side. If they are forced to sell, this will cause selling pressure on the overall market.

They have been short both $Nasdaq Composite Index (.IXIC.US)$ and the $iShares Russell 2000 ETF (IWM.US)$. At the same time, they have remained long the SPX, so even with the potential outperformance stage has been setting up for Russell 2000, it is hard to imagine it could roll over with hedge funds are shorting in this index.
Notable bettings toward individual names
We are in a very tough trading environment
We are in a very tough trading environment
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