Jason Shapiro 5.6 9 ideas

Shapiro notes there is "one of the largest ever short positioning in TLT in history." Simultaneously, despite the "Mag 7" needing to borrow massive amounts of money (which should hurt bonds), bond prices are rising and spreads haven't budged. When a market moves in the opposite direction of what "should" happen (fundamentals say down, price goes up) combined with extreme crowded short positioning, it indicates a violent reversal. The shorts are trapped and will be forced to cover, driving prices higher regardless of the macro narrative. LONG TLT to front-run the inevitable short squeeze. Inflation re-accelerating significantly could force yields higher despite positioning.

Shapiro observes a clear market rotation where "materials are leading" and "energies are leading," while the Mag 7 (Tech) are lagging. He explicitly states, "I love the materials trade." This is a second-order AI trade. The market realizes that to build out AI, you need physical inputs (energy, copper, construction materials) which are in shortage. The "19th Century businesses" are now the growth engine for the "21st Century innovators." LONG Materials (XLB), Energy (XLE), and Miners (GDX) as they are under-owned by the S&P 500 relative to Tech. A deep global recession crushing demand for physical commodities.

Shapiro's data shows "long Canadian dollar is very crowded" and "euro long is very crowded." In Shapiro's contrarian framework, when the crowd is heavily positioned on one side (Long), the trade is exhausted. A reversal in these currencies implies they will fall against the USD. SHORT Canadian Dollar (FXC) and Euro (FXE). (Note: This is effectively a Long USD trade). The Federal Reserve cutting rates faster than the ECB or Bank of Canada.

"People are very short sugar" and prices are at new lows. Shapiro notes that Sugar feeds into Ethanol, which correlates with Crude Oil. This is a multi-step derivative trade. If the crowded shorts in Sugar are forced to cover, Sugar (CANE) rallies. Higher Sugar prices drive up Ethanol costs. Higher Ethanol costs often pull Crude Oil (USO) higher. WATCH Sugar for a bottom; if it turns, initiate LONG positions in Sugar and Oil. Sugar supply gluts could keep prices depressed despite positioning; the correlation between Sugar and Oil is not 1:1.

Sentiment is bifurcated (people think it goes to $1M or $0), but positioning is not "empty" (extremely bearish) like it was at the 2022 lows. Shapiro buys when the "hall is empty" (extreme bearishness) and shorts when the "hall is full" (euphoria). Currently, the market is in between. Without extreme one-sided positioning, there is no contrarian edge. NEUTRAL / AVOID until positioning hits an extreme. Missing a momentum breakout if Bitcoin decouples from contrarian positioning logic.