The Last Time Hedge Funds Were This Short, Small Caps Plunged 30%

Tyler Durden's picture

The Russell 2000 Index posted a 2.2% decline in May, its worst month since October, and it appears a large swath of investors is now betting it has further to fall.

As Bloomberg notes, hedge funds and other major speculators have a combined net short position of 73,030 contracts in the small-cap index’s futures, according to the latest data from the Commodity Futures Trading Commission.

Russell 2000 sentiment has sharply declined since January, when future contract positioning reached record bullishness. It’s now the most short since May 2011.


In the four months following the May/June 2011 peak in shorts, the Russell 2000 dropped almost 30%, as QE2 ended, as was only rescued by the unleashing of Operation Twist...


And with the Fed balance sheet set to be 'normalized' and rate-hikes coming no matter what, one wonders what would save stocks this time?

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Schlump's picture

Fake news. People are happy under my reign. I am very good for stocks. Stocks are going to new records under me. Believe me, I guarantee.

Creepy_Azz_Crackaah's picture

Did the author bet everything on this?

Overleveraged_and_Impatient's picture

I believe it, and there's no way "you" would let a stock market crash on your watch. Your Working Group on Financial Markets is monitoring the S&P 500 and S&P 500 futures 24 hours a day, ready to hit "buy" with Billions of freshly printed electronic dollars at a time at any slight decrease in price.


I am expecting 3000 by year end, 4500 by next year. I am all in 3x Leveraged waiting to quit my job. Thank you Mr. President.


Great strategy.

FreeShitter's picture

Just go long SPXL. Its parabolic like everything else.

Overleveraged_and_Impatient's picture

Doesn't matter, won't happen this time. World Central Banks in coordination with the  President's Working Group on Financial Markets are pumping $200+ Billion Per Month into the Stock Market.


Crashes are no longer a possibility, that's why I've gone all in 3x Leveraged S&P 500. I am up $47,000 on the year so far and will quit my job soon. Get in while you can!


I predict S&P 500 at 3000 by Q1 18, and 4500 by Q1 19.

mo mule's picture

well then I predict  a nuke war with NK that brings in China and we'll nuke Russia along the way. Should be over by Oct. Not that anyone will be left to care, But who knows?.  Not I said the blind man...

You think it will still be BTFD then?  

CJgipper's picture

chance of decline = 0%.  


Fed is putting on catcher's gear as we speak.

MD's picture

Net speculative positioning has been negative for YEARS, according to this chart, yet the Russell 2000 continues to hit new highs. Good luck shorting this index this time, with no catalyst to the downside whatsoever.

ThirdWorldNut's picture

Enough of all this positioning crap. We all know its going to blow and blow big. Its all about timing now.

Remember, its the carry that can be a total biatch.

Snaffew's picture

heaven forbid they let this market close red.  I see green people.  Maggoty green financiers and bankers with fiat pouring out of their festering wounds.

Basketball Jonez's picture

Hedge funds have taken a beating lately. Only one analyst who is anygood and actually shows some of their past charts to the public         

Arnold's picture

Down to only one analyst now are ya?

Josephuskek's picture

They are actually good. But their fans on here can be a bit too much at times. 

Bill of Rights's picture

Boy that Suck BTC up another $109 today lets check on the stacking material...


Gold up .29 cents

Silver 0.047


What in your wallet.

mendigo's picture

Failure is not an option!

order66's picture

"with the Fed balance sheet set to be 'normalized'"

lol. not in this lifetime.

Overleveraged_and_Impatient's picture

This IS the NEW normal. S&P 500 will go to 10,000 before it goes back to 1,000. Only an idiot would bet against $200+ Billion per month of freshly created electronic dollars going into the stock market.


I am 3x Leveraged and expecting to retire next year in my early 30s as I watch my net worth increase day by day.

Arnold's picture

Thank you Ben Bernanke.

vesna's picture

Short squeeze, this time is different!

AllStarInvestor's picture

The "modern" ETF market is like a stupid gluttonous fat boy who eats and eats and eats - this market may never go down

omi's picture

The first picture says that the more short they went, the more small caps rose, so with a record short and price not dropping, its seems there's record amount of short-covering to do. While I don't understand why anyone would put their money on the long side, if you purely look at that first chart, your first thought should be how to get as long as you can.

flaunt's picture

one wonders what would save stocks this time?


Gartman turning bearish?