Inside Markets — Busy Week Ahead
Busy Week Ahead
October 25, 2024
The setup into Mag 7 reports looks like it has improved from last quarter at this time with hedge fund positioning falling to the ~55th percentile from the ~80th percentile. While there are more investor groups to account for, reduced Mag 7 positioning/concentration in hedge funds fits the mini cyclical rotation that proceeded the Fed rate cut and followed China’s coordinated stimulus efforts. Company-specific concerns around capex, regulation and AI disillusionment may also be partially responsible. Big increases in capex will likely be viewed as an incremental negative this quarter, but regulatory headlines and AI disillusionment concerns seem like they’ve faded over the last ~2 months. Positioning has been the key variable to post-earnings stock price behavior thus far in Q3. With lighter positioning going into Q3 Mag 7 reports, there’s likely to be less systemic risk for the SPX than there was last quarter.
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