by Chris Black
Hedge funds are positioning to short energy into 2024 (“reducing length”, likely in anticipation of recession), and while part of that does include selling longs, Goldman notes that the recent 10% plunge (marked with a red circle) in net trading flow into energy is driven by aggressive shorting:
“Energy long/short ratio fell to fresh multi-year lows as hedge funds continued to reduce net length over the past 6 weeks, driven by aggressive short sales.”
It turns out energy may be the bloodbath of early next year (the bullish kind of bloodbath).
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