This is why the markets will not crash in the near futureFirst things first: This is about the longer-term direction of the market. We're not advising against short positions here. In the short and medium term, they can lead to significant profits. However, given the seemingly fragile nature of the current markets, I'd like to point out the COT (Commitment of Traders) data and the corresponding levels in the Volatility Index (VIX). Here we have a weekly chart. The blue line represents the positions of the Commercials in the VIX. We can see that this line reached significant peaks just before the markets collapsed significantly, by 15% or more. Particularly notable are the extreme levels in November 2019, just weeks before the markets collapsed due to the COVID-19 pandemic. Often, the net long positions of the Commercials rise to these extreme levels, and the decline in stock indices occurs several weeks, sometimes a few months later. What does this mean for the current situation? Looking at the net long positions of the Commercials in the VIX, we can see that we are very, very far from extreme levels that would make a significant downturn likely. Therefore, it remains true: The Trend is Your Friend. And the trend continues to point upwards.
