Bank of America Analyst Insights on Commodity Trading Advisors (CTAs)

Bank of America analysts noted that Commodity Trading Advisors (CTAs) continue to hold a long position in US equity indices, maintaining their stance despite the recent declines observed in the S&P 500 and Russell 2000.

According to the bank's model, there has been little change in the positioning of CTAs in US equities over the past week.

In contrast, European equities have seen a shift, with CTAs covering more of their short positions in the EURO STOXX 50. The index has experienced a notable uptrend, with gains in 11 out of the last 12 trading days, prompting a move closer to neutral positioning among CTAs.

The situation in Japan presents a different picture. CTAs' long positioning in the Nikkei-225 remains at neutral levels. However, there is potential for increased buying activity from trend followers if the index breaks out to the upside.

As the year comes to a close, Bank of America anticipates that CTAs might drive their long positions back to the levels seen in July, taking advantage of typically lower trading volumes and reduced volatility that often characterize the year-end period.

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