Emerging Market Contagion As Hedgers Bet Against Dollar

This is an abridged version of our Daily Report.

Contagion spreads despite calm crude

Stories with “contagion” worries are spiking to the highest level in 5 years.

The cause, a collapse in emerging markets, is despite a calm market in crude oil, which has usually acted as a balm on those emerging market losses.

Smart contrarian bets

Smart money hedgers have taken an extreme short position in the dollar, which has preceded weak returns over the next 2-3 months.

At the same time, they’re betting heavily on metals and various ag contracts, with a good record of success.

Six days of blah

The S&P 500 fund, SPY, has suffered six straight days with a lower high and lower low than the prior day. Over its 25-year history, this has happened 12 other times.

The latest Commitments of Traders report was released, covering positions through Tuesday

The 3-Year Min/Max Screen shows that “smart money” hedgers added yet again to already-extreme positions in the metals. According to the Backtest Engine, when hedgers held more than 6% of the open interest in platinum, its two-year return was positive 41 out of 42 weeks.

For access to the full report, indicators, charts, screens, and Backtest Engine, log in or sign up for a free 30-day trial today.

The post titled Emerging Market Contagion As Hedgers Bet Against Dollar was originally published as on SentimenTrader.com on 2018-09-10.

At SentimenTrader.com, our service is not focused on market timing per se, but rather risk management. That may be a distinction without a difference, but it's how we approach the markets. We study signs that suggest it is time to raise or lower market exposure as a function of risk relative to probable reward. It is all about risk-adjusted expectations given existing evidence. Learn more about our service , research, models and indicators.

Follow us on Twitter for up to the minute analysis of market action.

Not ready to signup up for a free trial yet?

Signup for our Daily Lite email to receive highlights of our daily report, research and studies.

Follow us on Twitter:

Subscribe to our Youtube Channel:

RSS Feed

Subscribe to the Blog RSS feed