Warning Shot

Based on the previous CoT report, asset managers are short the Real Estate index 9,247 contracts which is 1,184% more than their average in 2020, and 840% more than their average 2019 positioning. Large deviations in asset manager positioning are good indicators of sentiment and risk.

For example, asset managers increased long positioning in the Energy sector around Dec 2020 by over 300%, taking it as high as 400% greater than average positioning. Energy has been outperforming and they remain overweight the index.

Last year they were overweight Real Estate and I recommended buying MPW

The trade worked out well and is still a good long term play, however, I've exited my VNQ position and trimmed down MPW in light of this warning signal.

This large deviation in short positions could be related to the rate hike expectations, however, if they don't pull the trigger on rates then REITS will squeeze much, much higher.

Other notes from the CoT report, changes against the 2020 average:
Asset Managers - Long the US dollar +324%
Asset Managers - Long Energy +261%
Asset Managers - Long Financials +204%
Asset Managers - Long Dividend index +408%
Hedge Funds - Eurodollar short +309%
Hedge Funds - 3-month SOFR short +2,710%

노트

Watching the wedge