A "Bearish" Pattern As Traders Flee Dollar Funds

This is an abridged version of our Daily Report.

“Bearish” engulfing

The price pattern in the S&P does not look promising, according to textbook technical analysis. Friday arguably was a bearish engulfing pattern that suggests weak buying interest and eager sellers.

It has not been a successful reason to sell, with stocks rising over the next two weeks essentially every time.).

Dollar apathy

Investors have fled mutual and exchange-traded funds that bet on, or hedge against, a rising dollar. Assets in the funds are trading at or near a 7-year low. Traders have also fled currency-hedged ETFs that bet on the performance of other countries while hedging against a rise in the buck.

Big bank bust

Among the most positive knee-jerk reactions to earnings was JP Morgan, which gapped up above its prior high and looked ready to challenge its 52-week high.

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

Most contracts saw “smart money” hedgers reducing previous extremes. The 3-year Max/Min Screen shows a new 3-year extreme in hedgers’ short exposure in the British pound and VIX futures.