How Large Speculator Positions in S&P 500 Index Trended Last Week



S&P 500 Index regains 4.3%

In the week ending February 16, the S&P 500 Index closed at 2,732.2, a rise of 4.3%, rebounding from the correction that spooked investors for two weeks. The only explanation of the equity market bounce that seems acceptable is that investors are coming to terms with rising inflation. The market’s reaction after the inflation report on Wednesday, February 14, is completely opposite to what was expected. The inflation report indicated strong growth in prices, which should have spooked markets, but markets rallied higher after the report. Maybe panic sellers have run out of stocks and the optimistic value buyers have started buying after the dip. All the sectors within the S&P 500 Index posted gains in the previous week, with the S&P 500 information technology (XLK), financials (XLF), and industrial (XLI) sectors leading the rebound.

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Speculator positions on S&P 500 Index                                               

For the week ending February 16, large speculators of the S&P 500 Index have decreased their net bullish positions from 36,189 contracts to 24,531 contracts, according to the Commodity Futures Trading Commission’s “Commitment of Traders” report. This report contains data only through Tuesday, the day before the inflation report, and traders likely added long positions after the market surge during the last three sessions of the previous week. ETFs that track the S&P 500 Index like the SPDR S&P 500 (SPY) and the iShares S&P 500 (IVV) have continued to witness outflows, but this could change if the rebound in stocks continues.

Outlook for the S&P 500 Index

Last week’s spectacular rebound could continue if there aren’t any surprises from the FOMC’s January meeting minutes, which are scheduled to be released on Wednesday. FOMC members’ view on rising inflation will be a key focus even though a 0.25% hike in March has been taken for granted. In the next part of this series, we’ll look at why the US dollar lost its lead in the previous week.


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