via MorgStan... There are a lot of similarities with this week’s unwind in crowded positions and that of January, but also a lot of differences. First the differences, which on net make this event worse than in January: 1/x
Today all of the pain is on the long side... This is concerning because long-side pain is always more challenging to deal with than a short squeeze, given most funds run long. 2/x
Both ends of the barbell trade are underperforming – NDX and RTY are going lower versus SPX. Given running a secular growth + cyclical reopening barbell has been increasingly the trend over the last few months, this underperformance is painful. 3/x
While the barbell is not working, high short interest names are working (underperforming) today, versus squeezing people in January. The bad news is that many have migrated out of single-name shorts and into ETF or broad market shorts, limiting this benefit. 4/x
Trades popular with retail are underperforming (ARK ETFs, Bitcoin, etc) – the bid from retail has been the marginal flow in the market lately, and if retail is forced out this removes an important source of downside support. 5/x
In January investors could largely write off the moves as technically-driven; this time there is a catalyst in the form of higher rates... this does little to help the positioning-driven unwind in the near-term and could delay the re-risking after this volatility passes. 6/6

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More from @CycleWacher

24 Feb
via JPM... Is the US retail impulse weakening? Over the past few days we started seeing the first signs that this previously strong US retail impulse is subsiding. 1/x
The most high frequency proxy of this US retail impulse is the one based on small traders equity option flows, i.e. option customers with less than 10 contracts... 2/x
After rising to record highs in the last week of January, this call option buying metric appeared to have stabilized at close to record high levels during to the first two weeks of February.... 3/x
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