Between the Lines

How sentiment data can be misleading without enough history. I was recently asked about a chart on dollar positions in DXY and I said you cannot say anything without looking at what happened in the last dollar bear market. In this chart below there is some history, and on a closer look, I see it as a bullish chart and not a bearish one. Peak retail positions in the options market at net long means a lot of call buying and selling occurred. Well in the past that was never at the top. Many of the points were bottoms as marked with red lines. In fact, the top that followed was after the net position came off and reduced and bottoms were net short. So the data is misleading. As I note in Indian markets as well. When Call Open interest is high it means that Calls are also being sold and record Call OI occurs at near term market bottoms. See the Feb 2020 US market top, positions were near Zero. [Chart courtesy Short term update - Elliottwave International]