Facts

• The Nasdaq 100 index entered a technical correction on Friday, March 27, falling more than 10% from its all-time high.
• During the March 31 (Tuesday) session, the Nasdaq 100 rebounded and gained 3.4%.
• As of Wednesday at 12:15, the Nasdaq 100 futures contract (US100) is trading approximately 425 points below the 200-day moving average (EMA200).
• According to Goldman Sachs Prime data, on a 6-week basis, net selling of US equities was the third largest in the past decade, approaching levels seen during the Covid selloff.

Recommendation

Long position on US100 at market price

• Take profit 1: 24500
• Take profit 2: 25000
• Stop loss: 23500

رأي

Hedge funds have been reducing exposure to global equities for six consecutive weeks, primarily through short selling, with the sell-off spanning all major regions. For example, in Europe, short positions in macro instruments have reached around 11%, the highest level in 10 years. Commodity Trading Advisors (CTAs) sold approximately $190 billion worth of equities over the past month and, as of March 30, held a net short position of about $50 billion. It appears likely that the recent rebound forced some position reduction, while Goldman Sachs estimates that CTAs could become buyers in every scenario over the next month. At the same time, pension funds are likely to buy equities due to month-end and quarter-end rebalancing.

Around $7 billion of negative options gamma is set to expire at month-end, reducing downward pressure on the market, following last week’s drop of more than 10% in the Nasdaq 100, which pushed the index into a technical correction. Equity markets have approached technically oversold levels, and the signs of hedge fund capitulation observed by Goldman Sachs, along with very high levels of pessimism, may create a contrarian opportunity to take long positions on US100.

In summary, the combination of negative gamma roll-off, expected pension fund buying, and a potential reversal in CTA positioning, together with a possible de-escalation in Iran—while, according to President Donald Trump, the US is close to “exiting the war in Iran”—appears supportive of at least a short-term attempt to reverse the downward momentum. We recommend taking a long position on US100 with take-profit levels at 24,500 and 25,000, based on the EMA200 and EMA50, and a stop loss at 23,500, defined using price action methodology.

US100 chart (D1 timeframe)

Source: xStation5

Octalas AI

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