This Week's CoT - Futures, Hedge Fund Buying

Russell 2000 mini-index: Currently net short 20.2k, down 5k.

Up 2.2 percent at Thursday’s high, the Russell 2000 ended down 0.2 percent this week, continuing to work on what could turn out to be the right shoulder of a potential head-and-shoulders formation. It is a potentially bearish pattern and will complete once the small cap index (2266.45) breaks the neckline at 2070s-2080s.

The index remains under its March 15 high of 2360.17. Through that high, it rallied 144 percent from the low of March last year. The temptation to lock in profit can rise. It also lost an ascending channel from last October-November. For now, 2070s-2080s is a make-or-break.

US Dollar Index: Currently net long 2.7k, down 772.

Dollar bulls defended a rising trend line from January 6 when the US dollar index (91.27) bottomed at 89.17. This was an important low, as support at 88-89 goes back at least 17 years. After that multi-year low, it rallied all the way to 93.47, which was ticked on March 31. In the selloff that followed, support just north of 92 was breached. This likely gets tested in the sessions ahead. The 200-day lies right there at 92.12.

VIX: Currently net short 94k, down 8.5k.

VIX completed a potentially bullish 10- and 20-day crossover on Thursday. Simultaneously, the daily Bollinger bands have narrowed, with Friday at 2.76 points. This is a precursor to a sharp move – either up or down.

On April 14, VIX (18.61) ticked 15.38 before rallying. It remains oversold on several timeframes. If a sharp move is on the horizon, odds favor it will be to the upside.

Immediately ahead, there is resistance at 19, or just under that. The volatility index tagged 18.87 on Thursday and 19.25 on Friday before pulling back. After this, the next roadblock is 20, or low-20s, and mid-20s after that. The 50- and 200-day at 20.30 and 23.92 respectively approximate these levels.

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