Commentary
Since the beginning of October, the market has performed better as a “Fed Pivot” bull case pushed investors into the market. We previously laid out the case for a strong “short squeeze” around the lows of September, stating:
“Currently, everybody is bearish. Not just in terms of ‘investor sentiment’ but also in ‘positioning.’ As shown, professional investors (as represented by the NAAIM index) are currently back to more bearish levels of exposure. Notably, when the level of exposure by professionals falls below 40, such typically denotes short-term market bottoms.
“As a contrarian investor, excesses get built when everyone is on the same side of the trade….