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BAML Notes Significant Short Equity Positions As USD Long Trade Flags

Large speculative traders increased their short positioning in the S&P 500 “to a crowded reading” below two standard deviations of magnitude, a hedge fund monitor report from Bank of America Merrill Lynch notes, as a correlation diversion has occurred with commodities and a long U.S. dollar trade.

BAML notes long / short ratios tipping to short exposure

Considering their technical models, BAML research analyst Jue Xiong and technical analyst Stephen Suttmeier note that equity long / short players are 33 percent net long, which is slightly below the 35 to 40 percent benchmark for long / short ratios. Macro hedge funds have increased their shorts in both the S&P 500 and the NASDAQ 100 to the highest levels since May 2013, the report noted.

In addition to equity short exposure, funds added to shorts in commodities and treasuries, with the...