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Where’d The Shorts Go?
Late last week, I spent a few minutes editorializing around record-low short interest on the two most prominent US equity index ETFs.
The inexorable decline in wagers against those products is a contributing factor to a multi-faceted feedback loop driving the indexes higher and index vol lower.
JPMorgan's Nikolaos Panigirtzoglou described a self-fulfilling prophecy whereby short covering lends support to the benchmarks and suppresses volatility, which in turn squeezes out more shorts and trigg
Everything mentioned in your last paragraph has little influence on the S&P 500. Unless one or more actually starts to impact one-month volatility measures. Until then, all of us “Chicken Littles” will continue to be run over by the massive buying by algometric-model-based fund managers.
Flows which dwarf even the money spent on share buybacks. Don’t stand in front of a stampede.
As to walking behind one, that has its risks as well, doesn’t it?