“Why have equities been trading short?” That’s what JPMorgan’s Nikolaos Panigirtzoglou wants to know.

Whenever you hear that question, the answer’s (almost) always: Because discretionary investors are under-positioned and thereby under-capturing a rally they’re then forced to chase.

There you go. End of article.

I’m kidding. That’s not the end of the article. I could never write just 39 words. Not even when the format isn’t amenable to verbosity. You could ask me to “sign and date here” and I’d still give you a short essay.

But that really is the answer. Most times and this time too. You’ve all heard me carry on ceaselessly about systematic cohorts dialing up their exposure into the summer stock melt-up as receding realized volatility dictated re-risking from vol-scalers and a trending market pulled in CTAs.

Humans, on the other hand, were slower to move. Or some of them, anyway. Although retail investor flows were indicative of home-gamer participation, some “pro” cohorts exhibited caution. That’s more or less what Panigirtzoglou said while answering his own question.

“One group of investors that still appear to be somewhat cautiously positioned are macro hedge funds,” he wrote, pointing to the figure on the left, below, which shows that group’s beta to the market was likely still negative in September.

The figure in the middle, above, shows spec positioning in US equity futures. Net longs are middling, which “suggests that spec investors’ exposure to US equities is not particularly elevated and in principle has room to rise,” Panigirtzoglou said.

The right-most figure above speaks for itself, but just in case, I’ll say a few words. Short interest in the largest S&P ETF hasn’t retraced the uptick seen around Donald Trump’s tariff unveil.

“While short interest in the QQQ ETF remains within the relatively low range where it has settled since early 2024, short interest on SPY has only partially unwound the sharp increase around the time of the ‘Liberation Day’ announcement,” Panigirtzoglou went on. That, he said, “suggest[s] some caution remains.”

So, again, if the equity market feels like it’s trading short, the likely — almost self-evident — explanation is that some human traders are “playing catch-up,” as Panigirtzoglou put it.