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Hedge Funds and Large Speculator Positions: Week Ended February 2

PART:
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Part 2
Hedge Funds and Large Speculator Positions: Week Ended February 2 PART 2 OF 7

Large Speculator Positions on S&P 500: Week Ended February 2

S&P 500 Index posts a record weekly loss

For the week ended February 2, 2018, the S&P 500 Index (SPY) closed at 2,762.13, falling 3.9%. A 2% fall in the index in a single day hasn’t been seen since 2016, and investors are wondering if this is the much-awaited correction. The key reason for the sell-off last week was the threat from rising interest rates after the Fed sounded hawkish at its recent rate-setting meeting, despite leaving rates unchanged.

Among the S&P 500 sectors, the energy sector (XLE) shed the most, falling 6.4%. Negative surprises from key industries such as Exxon and Chevron added to the sector’s woes. Utilities (IDU) and telecommunications (IYZ) were the sectors that managed lower negative returns.

Large Speculator Positions on S&#038;P 500: Week Ended February 2

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Speculator positions on S&P 500 index

For the week ended February 2, large speculators of the S&P 500 Index (IVV) have increased the number of net bullish positions to 38,296 contracts from 29,980 contracts. The data were reported by the CFTC (Commodity Futures Trading Commission) in its weekly COT (Commitment of Traders) report. However, the data represent positions as of Tuesday, January 30, 2018, before the major sell-off on February 2. There could be some reduction in bullish positions reflecting the recent sell-off, which could be seen in the next COT report.

Outlook for the S&P 500 Index

The positive sentiment that drove the US equity indexes higher in recent months will be put to the test this week. Will investors rush back to help recover the losses, or will they try to lock in their gains and push the index even lower? The index remains in a heavily overbought zone, but the threat of rate hikes might not lead to a major sell-off. This week, the other threat to the market is the spending bill deadline on February 8. Investors could be looking to the United States Congress to resolve the issue sooner rather than later.

In the next part of this series, we’ll see why the dollar managed to recover from its multi-year low last week.

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