US CFTC data showed S&P 500 NC net positions rose to $-101.4K from $-110.1K.
The net position remained negative, meaning the total still reflected a net short stance.
The net short position on S&P 500 futures has decreased, moving from -110.1K to -101.4K contracts. This shows that large speculators, like hedge funds, are becoming less bearish on the stock market. While the overall sentiment is still negative, the pressure is easing as some of those short bets are being closed out.
This shift in positioning follows the April 2026 jobs report, which showed payrolls increasing by a moderate 195,000, calming fears of an overheating economy. Paired with the latest CPI inflation data holding steady at 3.4%, it gives the Federal Reserve room to pause its rate-hiking cycle. This economic stability is likely what’s causing the most pessimistic traders to reconsider their positions.
We saw a similar dynamic back in late 2025, when extremely high short interest preceded a sharp market rally as traders were forced to buy back their positions. That environment of “forced buying” can create powerful upward momentum in a short period. The current reduction in short positions suggests the beginning of a similar unwinding, which could push the market higher in the near term.
For the coming weeks, we believe traders should consider buying near-term call options or bullish call spreads on the S&P 500. This strategy allows for participation in a potential relief rally driven by continued short-covering. The goal is to capitalize on this shift in sentiment before it becomes the consensus view.
Alternatively, for a more conservative approach, selling out-of-the-money put spreads is an attractive option. This strategy profits from the market moving up, sideways, or even slightly down, reflecting the view that the intense selling pressure has likely subsided for now. With the VIX having recently dropped from 24 to below 20, it signals that market fear is diminishing, supporting this type of income-generating trade.
