Overview
Trend-following hedge funds, also known as CTAs (Commodity Trading Advisors), are expected to continue buying US stock indices in the upcoming week. While big banks like Bank of America (BoA) are more positive about this, others like Goldman Sachs and UBS expect only light buying activity.
US Stock Market Outlook
S&P 500 ($SPX)
Trend: Strong upward trend
Performance: +23% (up from +6% last week and -50% three weeks ago)
Outlook: CTAs that are already long are expected to increase their positions. Short positions by long-term traders are also falling.
NASDAQ-100
Trend: Very strong upward trend
Performance: +41% (up from +27% last week and -14% three weeks ago)
Outlook: Similar to the S&P 500, trend-followers are likely to keep buying more.
Russell 2000 ($RUT)
Trend: Still negative
Performance: -22% (improved from -32% last week and -49% three weeks ago)
Outlook: CTAs are less likely to buy this index as the overall trend remains weak.
Global Market Trends
Japan – Nikkei 225
Trend: Recovering
Performance: +22% (recovered from -7% last week and -32% three weeks ago)
Outlook: CTAs are expected to buy Japanese stocks as the price trend improves.
Europe – Euro Stoxx 50
Trend: Very strong
Performance: +85% (up from +65% last week)
Outlook: Since the trend is already very strong, CTAs might start selling or reducing their positions.
Summary
US Indices: S&P 500 and NASDAQ-100 are in strong uptrends; CTAs are likely to continue buying.
Russell 2000: Still weak; not much interest from trend-followers.
Japan: Buying interest is rising.
Europe: Might see some profit booking as trends peak.
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