Large Speculator Positions on the S&P 500 Index


Dec. 20 2017, Updated 9:02 a.m. ET

S&P 500 Index trends higher

The S&P 500 Index posted another weekly gain as optimism surrounding tax reform surged higher in the week ended December 15. The news about a final tweaking of the tax reform bills leading to a common version boosted the markets before the end of the week. The S&P 500 Index (SPY) closed the week at 2,675.81, rising 0.92%.

Looking at the individual sector performances, telecoms (IXP) and the tech sector (XLK) gained the most as news about favorable regulations on net neutrality hit the market. The S&P 500 utilities (XLU) and the materials sectors posted minor losses in the previous week.

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Speculators decreased bullish bets on the S&P 500 Index                     

For the week ended December 15, large speculators of the S&P 500 Index (IVV) decreased the number of net bullish positions from 34,401 contracts to 18,126 contracts. This data was reported by the Commodity Futures Trading Commission (or CFTC) through its weekly Commitment of Traders report.

This data only reflects positions through December 12, 2017, and doesn’t reflect the effect of the potential tax reform bill. These speculator positions could have changed since that date and could affect this week’s numbers.

Outlook for the S&P 500 Index

In the week ended December 22, investors should be focused on the US tax reform legislation. December has been a cyclically weak month, and the markets usually bounce back in the new year. However, the passage of the tax reform bill could propel markets higher in the final weeks of 2017.

With the exception of its decline of -0.04% in March, the S&P 500 Index has had a generally positive year. So far, December looks like it could end in the green for the S&P 500 Index .

Economic data scheduled to be reported in the US this week includes the Personal Consumption Expenditure (or PCE) index and capex investments from November. Unlike the tax reform bill, these economic indicators are not expected to have a major impact on equity prices.

In the next part of this series, we’ll analyze how the US dollar reacted to the latest rate hike from the Federal Reserve.


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