Pain Trade Is Higher As Already Catastrophic Sentiment Turns Apocalyptic, Waiting For The CRE Shockwave

One week ago, when we showed that according to the latest CFTC Commitment of Traders data hedge funds had predictably reloaded on bearish stock bets in hopes the latest market retreat will persist amid worsening economic data and corporate earnings, we warned that "unless selling accelerates and breaches below key support levels - which are now being defended aggressively by CTAs which have over $20BN left to buy this week in a flat tape - expect even more squeezes."

Indeed, as we showed in the chart below, large specs - traditionally hedge funds - saw their net short positions in S&P 500 e-mini futures increase to roughly 321,000 contracts. That was the most bearish reading since November 2011 which followed the brief bear market in the aftermath of S&P cutting the US AAA sovereign credit rating.,,