CTA selling activity has been weighing on prices despite concurrent signs of Chinese buying activity, TDS’ Senior Commodity Strategist Daniel Ghali notes.

Set-up now strongly favors continued upside

“With CTA selling exhaustion now in the rearview, the set-up for flows now strongly favors continued upside.”

“We now expect a whipsaw in trend follower positioning over the coming weeks, given our simulations of future prices now point to extreme asymmetry in expected flows with limited selling activity on the horizon even in a big downtape for prices, but significant buying activity in a commensurate uptape that could see CTAs shed their net shorts and build a net long position.”