The Nasdaq 100 and S&P 500 closed at fresh record highs last week, with the former up over 15% so far this month, setting up a pivotal week that will likely see the Federal Reserve hold on interest rates this Wednesday, five of the Magnificent Seven releasing their quarterly earnings reports, and continued uncertainty over the Strait of Hormuz. According to Capital.com client positioning data, long bias in the Nasdaq 100 has moved further into majority short territory, reaching 60% from a slight sell 54% the previous Monday, as last week’s record close prompted further long unwinding and new short positions being initiated. The S&P 500 has seen lighter profit-taking by comparison, with long bias easing to 57% from 59%, remaining majority long. The Dow 30, which suffered a red weekly finish, has seen sentiment move in the opposite direction, with long bias climbing to a heavy 68% from 61% a week ago.
Outside the US, the picture is also mixed. A pullback in the FTSE 100 has drawn traders to the long side, with buy bias rising to 77% from 70% and approaching extreme long territory. In contrast, the Nikkei 225 has seen a sentiment shift following its own record high, with the bias shifting from a majority long 56% to a slight short 51%.
In commodities, gold is approaching extreme long territory, with buy bias rising to 77% from 73% at the start of last week. Traders holding long positions have largely held through a brief pullback below $4,700 earlier in the week, treating the dip as an entry point rather than an exit. Silver has seen a similar pattern, with long bias rising to 83% from 78%. WTI crude oil’s majority buy sentiment dropped to 57% from 65%, as the ceasefire extension has reduced some of the urgency in long positioning, with traders proving less willing to hold longs at elevated price levels.
In currency markets, USD/JPY has shifted from a slight long at 52% to a majority short at 56%, with traders initiating short positions into recent price gains as the pair continues to hover near the ‘red line’ of 160. That level has historically prompted intervention responses from Japanese authorities and traders appear to be positioning for a similar outcome, and all this prior to tomorrow’s Bank of Japan policy decision.
Monte Safieddine, Head of Market Research, Capital.com MENA said:
“The divergence between the Nasdaq 100 and Dow 30 last week tells the story of a market navigating two separate sets of concerns simultaneously. Nasdaq traders are pulling back from a record high, while Dow traders are adding to positions in an index that did not participate as fully in the rally. In commodities, the persistence of long bias in gold and silver even through a price dip is notable, pointing to traders who are treating geopolitical uncertainty as a structural rather than temporary factor. The most pointed positioning signal this week is in USD/JPY, where traders have shifted to majority short as the pair hovers not too far off the 160 ‘red line’ and ahead of policy announcements from the Bank of Japan tomorrow and the Federal Reserve on Wednesday, and where both are expected to hold on rates.”
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