**S&P Futures Hit 2 Month High: 4,200 Looms As Record Bearish Sentiment Leads To Another Meltup**
S&P Futures Hit 2 Month High: 4,200 Looms As Record Bearish Sentiment Leads To Another Meltup
We have said previously on more than one occasion that the bear market rally just won't end until Wall Street's two bearish cosplayers, Marko Kolanovic and Mike Wilson, throw in the towel and turn bearish...
> Rally won't end until Wilson and Marko turn bullish
>
> — zerohedge (@zerohedge) February 7, 2023 (https://twitter.com/zerohedge/status/1623061687237595136?ref_src=twsrc%5Etfw)
... and sure enough, one day after both of these broken records published their latest weekly doom and gloom performance art **meant solely to get institutional and retail investors to sell to their flow desks**, futures have melted up even more, with spoos now trading a 2+ month high.
US equity futures were set to hold onto Monday’s sharp hour bounce as investors awaited a slew of earnings: contracts on the S&P 500 rose 0.4% by 7:00a.m. in ET while Nasdaq 100 contracts outperformed, rising 0.7%. Johnson & Johnson, Goldman Sachs Group Inc. and Netflix Inc. are among those reporting later.
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In premarket trading, Riot Platforms led fellow cryptocurrency-exposed stocks higher in US premarket trading as Bitcoin rebounded to inch closer to the $30,000 mark. Here are some other notable premarket movers:
- Bank of America rose 2% after reporting solid earnings which beat on the top and bottom line.
- Alibaba shares rise in US premarket trading after Reuters reported that Chinese regulators are expected to cut a fine on Ant Group to $700 million from an initially planned amount of more than $1 billion.
- Gamida Cell rose as much as 81% in premarket trading on Tuesday, poised to set a second consecutive intraday record, after the FDA approved its cell therapy Omisirge for patients with blood cancers to reduce the risk of infection following stem cell transplantation.
The irony is that it is not just Marko and Mike that are dodecatupling down on bearishness as stocks melt up: **so is everyone else.** As Bloomberg notes, traders are "scaling the towering monolith of skepticism that currently comprises Wall Street’s view of markets takes uncommon courage" and the more the S&P 500 goes up — and it’s risen 6% in a month — the less people trust it. Hedge funds have been loading up bets against US stocks, **and a model kept by Goldman Sachs shows mutual fund and futures-market outflows suggest that rather than rise, the index should have been down 3% over the past three months.**
**“Being bullish today is a very lonely proposition**,” said Eric Diton, president and managing director of the Wealth Alliance. It is, also, very profitable and as we have repeatedly warned readers, positioning is so bearish that stocks have no choice but to melt up. Moreover, **investor allocation to equities relative to bonds has dropped to its lowest level since the global financial crisis as worries about a recession take hold,** according to Bank of America Corp.’s global fund manager survey.
And that's why futures at 4,200 are a lock: **because with everyone bearish, and nobody left to sell - or short - what comes next is another rolling short squeeze.**
Traders are also anticipating the end of Federal Reserve policy tightening and are hoping for a milder-than-expected economic slowdown, optimism that has boosted equities this year. “If interest rates go down to the extent that’s priced into the forwards, we’re not going to get on top of inflation,” Euan Munro, chief executive officer at Newton Investment Management, said on Bloomberg Television. “Inflation is going to be quite hard to beat and will require interest rates to be held higher for a lot longer.”
European stocks are ahead with the Stoxx 600 up 0.5%, led by gains in the banks, mining and travel sectors. Here are the most notable European movers:
- Demant rises as much as 8.1% after the Danish company posted first-quarter results ahead of expectations and boosted its FY guidance, with its Hearing Aids unit delivering a strong beat
- Sika shares gain as much as 3.9% after the Swiss builder boosted sentiment by confirming its guidance and giving a positive indication on margin, according to Baader
- Entain shares jump as much as 4.8% after the UK-based gambling company reported an increase in first-quarter net gaming revenue, with most analysts seeing in-line results
- Moneysupermarket shares gain as much as 2.7% as analysts said the trading update from the price-comparison platform was robust, driven by strength for its Insurance segment
- IntegraFin shares rise as much as 6.8%, the most since November, as analysts …