It appears “the trend is your friend” is only a mantra that ‘speculators' are willing to follow for stocks as the incessant rally in US Treasury bonds has led traders to position for higher rates at the largest level since May 2010 (more short squeeze, rates to 1%-handle ammunition?). However, the surging stock market has merely encouraged more to follow that trend as S&P 500 (SPX) specs are the ‘longest' since July 2013. Just as we noted previously, this is deja vu all over again for hedge positioning into 2014 (but even more extreme)… and that was a painful year for most.

This is unlikely to end well…

As the ammo for more stock short squeezes is removed…

As BofAML notes,

Equities. Large specs bought S&P500 contracts increasing net long positioning to largest since July 2013. Specs also bought Russell reducing net short positioning. Russell has been bought in 10 of past 13 weeks. MAA suggests S&P500 and Russell buying pace may reduce while technicals are also near term negative.

Interest Rates. Specs sold 10-yr contracts increasing net short position to largest since May 2010. Technicals suggest near term risk for yields is to the downside.

Charts: BofAML