CME Positioning Weekly: Short Covering ≠ Institutions Have Turned Bullish
Latest COT (as of 10/27): Leveraged funds have cut their net shorts for a third straight week, with short covering accelerating; over the same period, asset managers have added shorts, and their net longs have continued to shrink. Don’t read “hedge funds buying back shorts” as “Wall Street is bullish across the board.”
A side-by-side look:
1. Leveraged funds: Net shorts have narrowed by about 40% over three weeks, with almost no increase in longs—this looks more like position reduction and short covering than new long positions.
2. Asset managers: Net longs have fallen again, while the share of short positions has risen; they remain net long, but are reducing their risk exposure.
3. Timing: The snapshot is from before the sharp weekend sell-off and wave of liquidations, so don’t use it to explain the price action that followed.
Short covering tells us “who is closing shorts”; whether longs are genuinely increasing, and whether the basis and ETFs are moving in sync, tells us “whether new longs are entering.”
$BTC
Latest COT (as of 10/27): Leveraged funds have cut their net shorts for a third straight week, with short covering accelerating; over the same period, asset managers have added shorts, and their net longs have continued to shrink. Don’t read “hedge funds buying back shorts” as “Wall Street is bullish across the board.”
A side-by-side look:
1. Leveraged funds: Net shorts have narrowed by about 40% over three weeks, with almost no increase in longs—this looks more like position reduction and short covering than new long positions.
2. Asset managers: Net longs have fallen again, while the share of short positions has risen; they remain net long, but are reducing their risk exposure.
3. Timing: The snapshot is from before the sharp weekend sell-off and wave of liquidations, so don’t use it to explain the price action that followed.
Short covering tells us “who is closing shorts”; whether longs are genuinely increasing, and whether the basis and ETFs are moving in sync, tells us “whether new longs are entering.”
$BTC