"...with Trump and Yellen making headlines last week, the (SPX) chart below bears the footprints of both figures... with the early November to mid-December Trump rally followed by the 'Fed stall' that occurred after hints of more aggressive rate hikes in 2017...
"... to the extent that there is an extreme VIX futures short position among large speculators, some of which are no longer hedged, the risk of a volatility pop has increased. But, per the second CoT chart below, note how SPX large speculators are in an extreme net short position, too -- which is counterintuitive, because if you are positioned for stocks to go lower, you are likely expecting volatility to move higher... Piecing this together, the best conclusion is that stocks do not have the same magnitude of downside risk at the moment relative to the upside volatility risk... many market participants will be intensely in tune with the president's actions in his first 100 days in office. So, with an upcoming FOMC meeting only eight trading days away, a volatility-type hedge could be warranted."
-- Monday Morning Outlook, January 23, 2017
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