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How Did Large Speculators React to Last Week’s Events?

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Part 2
How Did Large Speculators React to Last Week’s Events? PART 2 OF 7

Speculator Positions on S&P 500 Index Rose Last Week

S&P 500 Index scales another peak

The S&P 500 Index scaled another peak last week despite the upturn in volatility. The key mover for the index was the positive development surrounding tax reform. However, the spike in oil price and positive economic data from the US gave the index a further boost. For the week ending December 1, the S&P 500 Index (SPY) closed at 2,642.2, appreciating by 1.6%.

Barring the technology (XLK) and real estate sectors, all the other sectors recorded gains last week. The standout performers were the telecom and financial (XLF) sectors, which recorded gains of 6.7% and 5.2%, respectively. The energy (XLE) sector, which was lagging in the previous week, bounced back on the news of the extension of production cuts from OPEC nations.

Speculator Positions on S&amp;P 500 Index Rose Last Week

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Speculators increased bullish bets on S&P 500 Index                      

For the week ending December 1, large speculators of the S&P 500 (IVV) Index have increased their number of net bullish positions to 22,788 contracts from 22,788 contracts. This data was reported by the Commodity Futures Trading Commission (or CFTC) through their weekly commitment of traders report. This data is only through Tuesday, and speculator positions could have changed in response to the developments surrounding the tax reform bill and former NSA advisor Michael Flynn’s admission of guilt.

Outlook for the S&P 500 Index

The US indexes will likely react to positive news surrounding tax reforms, but the extent of the appreciation is difficult to assess, as a part of tax reform news could have been priced in already. In terms of economic data, US non-farm payrolls data will be of importance and market consensus expects the addition of another 195,000 jobs in November. A positive reading is likely to support the index at the current level.

In the next part of this series, we’ll look at why the US dollar failed to surge higher last week.

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