The latest data from the CFTC shows continued bearishness from small speculators. Small speculators have been skeptical of the rally since its inception and remain so. More importantly, they have been wrong. This cruel market gave them a taste of victory over the last few weeks before snatching back half of the losses. Despite my cautious tone since S&P 1120, I fully disagree with the small speculators. You cannot be short equities in the face of the strong trends we continue to see. Earnings are likely to continue to be robust, we are approaching another stimulus based spring real estate season and stimulus in general remains accommodative. Small speculators as a contrarian indicator is likely to continue working.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.