This Week's CoT: Futures And What Hedge Funds Are Buying

Russell 2000 mini-index: Currently net short 27.8k, up 4.7k.

On Wednesday, when the Russell 2000 tumbled 3.3 percent, the neckline of a potentially bearish head-and-shoulders formation was just about tested, with the session low of 2132.25 and the neckline at 2070s-2080s. On Thursday, Wednesday’s low was tested again before bolting higher.

Despite the potential for near-term strength, small-caps remain on the defensive. The Russell 2000 (2224.63) remains under the March 15 record high of 2360.17 and has breached an ascending channel from last October-November.

There is decent straight-line resistance at 2280s.

US Dollar Index: Currently net long 2.4k, up 368.

A rising trend line from January 6 when the US dollar index (90.32) bottomed at 89.17 has been lost – again. The support was breached last Friday, but only to see it recaptured this Wednesday and then lost again on Friday.

On Tuesday, the index ticked 89.96. Support at 88-89 goes back at least 17 years. This is a must-save.

VIX: Currently net short 87.2k, down 9.5k.

In a matter of four sessions this week, VIX shot up 12.14 points through Thursday’s intraday high of 28.93. Then, it gave up 10.12 points by Friday’s close. Talk about volatility.

The volatility index closed above the 200-day on Wednesday but just for a session. Volatility bulls were unable to hang on to Thursday’s gains, reversing sharply lower.

Thursday’s spike reversal represents yet another lower high since March last year when VIX (18.81) spiked to 85.47 before reversing.

As things stand, it is probably eyeing mid-teens.

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