Peek Into Future Through Futures, How Hedge Funds Are Positioned - Tuesday, Dec. 29

US Dollar Index: Currently net short 14.9k, up 819.

Horizontal support at 88-89 was just about tested seven sessions ago when the US dollar index (90.28) made an intraday low of 89.64. This was the lowest print since April 2018. In January through April that year, the index dropped to just north of 88 several times; this support goes back to at least March 2004.

On Monday last week, the index had a wild session closing at 89.95 but rising as high as 90.95 to vehemently get rejected at the 20-day. Last Tuesday and this Monday, it again went sub-90 intraday to rally back above the level.

Late last month, the US dollar index lost crucial support just north of 92, which goes back to at least June 2003. Even earlier, in March this year, it peaked at 103.96. It has obviously come down a lot. Dollar bulls have an opportunity here to defend 88-89. Their nearest test lies at 90.50s, with the 10-day at 90.25.

VIX: Currently net short 101.5k, down 11.7k.

Volatility was very volatile on Monday last week. VIX (21.70) surged as high as 31.46 in that shooting star session but only to get rejected at the 200-day to close up 3.59 to 25.16, under the 50-day; the session high also kissed trend-line resistance from March when VIX shot up to 85.47.

Volatility bears would love a break of 20, which they have failed to achieve the past four and a half months. Until that happens and support turns into resistance, risk-reward odds favor that 20 holds. That said, in the very near term, the daily has room to go lower.

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