• David Jones, Chief Market Strategist at Capital.com


• 24.06.2022 02:30 pm
#fintech #investment

According to data from the global investment trading platform, Capital.com, 38% of trades placed by its clients so far this quarter are short, which is 15% higher compared to the same period last year.   This may suggest that traders have been getting more bearish as the year goes on —although of course as a total group most are still favouring the long side of the market. 

Given the size of market slides— across all sorts of asset classes this year—it is perhaps not surprising that more traders are choosing to short-sell,  to perhaps position themselves to profit from further market weakness, or even hedge other investments. 

Once again it is the NASDAQ 100 that has proved to be the most popular market with traders this week.  Volatility always attracts traders - and we still continue to see sizeable swings in global stock indices.  Only last week the NASDAQ traded down to its lowest levels since November 2020.  The last few days have seen something of a bounceback but at the moment, opinion seems split as to whether this is a sustainable recovery or just another dead cat bounce before the market slides lower once more.

The area that has seen the largest jump in short trades is commodities. This may suggest— for some traders at least—there is a level of comfort in trying to call the top in the great commodity bull run that has persisted for at least the last couple of years.  Of course, a fall in commodities would be welcome by many economies around the world as it would help to slow the rise of inflation.

After the NASDAQ index, the next two most traded markets on Capital.com over the past week have been in the energy grouping: crude oil and natural gas.  During June, West Texas Crude has travelled from above $120 a barrel back to $101. Although lacking any firm direction, these sort of swings provides plenty of day-to-day volatility to attract shorter-term traders.  Natural Gas has been more volatile again compared to crude oil with geopolitical developments an important driver for this market recently, as Europe tries to find alternatives to Russia for its energy requirements. This month US Natural Gas has dropped by 38% in under three weeks - it remains to be seen whether we have seen an important top in this market for now - or whether this is just another buying opportunity before the price races higher once more.