Markets expect CTAs to continue covering shorts in the markets. Platinum this session, but the balance of risks to CTA positioning has shifted noticeably to the downside, notes Daniel Ghali, senior commodity strategist at TDS.
The balance of risks for CTA positioning is shifting downwards
“Unless price strength continues, we expect CTAs to return to the bid with large-scale selling activity expected over the next week, even in a flat market. And, a large decline could trigger massive CTA selling activity totaling up to -50% of the algorithms’ maximum size.”
“While there are still some scenarios for next week that could result in continued buying activity by algorithmic trend followers, the scenario for flows already points to extreme downside asymmetry.”
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
