Week of March 30

Highly uncertain times - Lean on quantifiable positioning data for signs of Capitulation

Recap of last week

We had a fantastic week last week. Not because we hit some multibagger on some 0dte yolos. A major positioning decision we made end of last year paid off in a huge way.

We didn’t trim equity allocation from like 80% long to 70%, or some finer details like that. We sold 100%, every single stock we owned. And now the SPX is down 10% on the year, technology stocks which everyone were OW, are down even more. Now we are officially KILLING it this year, all because we completely dodged the biggest market drawdown in 4 years. This is the worst year for the SPX since the 2022 bear market. We completely dodged the entire thing.

On a shorter term timeframe, we said keep selling rips and expect the downtrend to continue, as CTAs to sell 20B e minis last week. The post was sent Monday with ES at around 6700 and last traded price was around 6400, about 5% lower.

Anyways, SPX is trading about 10% down from its ATH, what things am I looking at to look for a potential bottom here. Lets start by acknowledging the EXTREME uncertainty of the current situation. We dont know anything about the war really, just what is reported through the media, and often fake. We dont truly know what the US’s objectives are, nor Iran. We dont know the extent of the damage in the energy supply. We dont know, x 1000. So lets focus on what we do know. We look at, in detail, aggregate institutional positioning across the market and we are getting to a point where a full on capitulation is near. If positioning is bombed out, truly, then you can buy stocks and be comfortable not knowing because the worst has been discounted.

Next move for markets