Long Dollar & U.S. Stocks Most Crowded Trade, Says BofA

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Mark Melin
Published on
Updated on

When investing concepts of mean reversion and too many people in a trade collide, watch out. It might be time for that trade to be ending. A new Bank of America Merrill Lynch report warns that the “U.S. decoupling trade,” long stocks and the dollar, is now “crowded.” Lower energy prices supportive for US equities and the US Dollar Citing CFTC speculative positions being at a 52-week extreme, irrational exuberance and the magnitude of positioning in the trade is now “reaching a dangerous level,” B. of A. strategists were quoted as saying:  “The collapse in oil prices over the past…

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Mark Melin is an alternative investment practitioner whose specialty is recognizing the impact of beta market environment on a technical trading strategy. A portfolio and industry consultant, wrote or edited three books including High Performance Managed Futures (Wiley 2010) and The Chicago Board of Trade’s Handbook of Futures and Options (McGraw-Hill 2008) and taught a course at Northwestern University's executive education program.