Big Love for Small Caps Among Futures Traders Shorting S&P 500

(Bloomberg) -- Enthusiasm for U.S. small-cap stocks does nothing but increase, even as bullishness shows signs of waning for their larger brethren about a month after Donald Trump’s election.

Traders are more excited about the Russell 2000 Index, the benchmark for small-cap companies that are largely homegrown in the U.S., than at in time in the past three years, according to Commodity Futures Trading Commission data compiled by Bloomberg. At the same time, they’re short the S&P 500 Index for the first time since June.

“This is the first time since May speculative short positions are consistently higher than long positions,” Michael O’Rourke, chief market strategist at Jonestrading Institutional Services LLC in New York, wrote in a note to clients Monday. “This is likely helping to support the index.”

  • Ratio of CFTC non-commercial long contracts to short contracts on Russell 2000 jumped to 0.62 by the end of November, the highest since May 2013. Metric was 0.42 before election.
  • Ratio on S&P 500 Index fell to 0.45 by the end of last month from as high as 0.6 in August. Traders have increased long positioning since more than a one-year low in April.
  • Domestic sales account for average 85 percent of revenue for Russell 2000 companies, compared with 72 percent in the S&P 500.
  • Russell 2000 up 17 percent year-to-date, 11 percent since election; S&P 500 up 8 percent and 3.1 percent, respectively

Stay Updated With Stock Market News on BloombergQuint