We’ve got some unusual activity in the data right now, and I don’t think most traders are paying attention to it. The Prime Book — which includes hedge fund trades from the biggest desks — is showing one of the largest buy spikes we’ve seen since the COVID lows.
That alone is worth watching. But when you zoom out and stack it against long/short ratios and futures positioning, there’s a bigger story forming — and it could set up some serious trades.
Hedge Funds Are Buying While the Crowd Closes Out
This isn’t retail panic buying. This is institutional — and it’s happening fast. Prime Book buying has surged, matching levels we saw near the 2020 recovery zone. At the same time, we’re seeing big short covering hit single stocks hard. That’s a clue the pressure is on.
Now here’s where it gets interesting. While that aggressive buying is taking place, the S&P 500 futures positioning shows a totally different game. We just saw $35 billion worth of sales — and the chart suggests a lot of long positions are being closed out, not just shorts.
That divergence matters. Last time we saw this setup, it was at the start of 2023. Big shorts got squeezed, we saw a temporary bottom, then pulled back and exploded higher.
Could that happen again? Possibly. But the setup is tricky.
Is This the Start of a Squeeze or the Calm Before the Pullback?
We’ve been pushing higher, but it’s not broad-based. The oscillator gauges are maxed out. Short interest is getting cleared. And the S&P 500 is sitting at a level where we’ve seen temporary tops before.
That doesn’t mean we crash — but it does mean I’m hunting a top right now.
And when too many indicators get stretched this far — especially with OPEX on deck — it’s often a warning sign. That’s why I’m leaning cautious here. We may see a little more grind higher through Friday, but if this plays out like past setups, a pullback is coming.
Possibly a sharp one.
The key takeaway? Hedge fund buying spikes like this often front-run a move — but not always the one you think. I’m not chasing this. I’m watching for exhaustion and setting traps of my own. The best trades come when the squeeze is over and the real trend starts.
Stay sharp.
Jeffry Turnmire
Jeffry Turnmire Trading
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