Stocks keep charging to record levels, and they could get another boost if a key group of investors is forced to turn more bullish. JPMorgan strategist Nikolaos Panigirtzoglou noted that macro hedge funds, a major market-moving group that trades in and out of major asset classes based on global economic factors, remain cautious despite the S & P 500 hitting all-time highs. “While the overall reactions to positive and negative news are more normalised at the aggregate level, our positioning proxies indicate that some investors appear to exhibit more cautious positioning,” he said. Those proxies include speculative investor positioning on U.S. stock futures along with short interest on the SPY ETF, which tracks the S & P 500. “Similarly, when we look at the spec positioning in US equity futures the net long positions, these are now relatively close to their long run median after having been well above the median in 2024 and up to 1Q25. This suggests that spec investors’ exposure to US equities is not particularly elevated and in principle has room to rise,” he added. The S & P 500 and Nasdaq Composite posted all-time highs on Wednesday, with the former ending the day at 6,753.72 and the latter closing above 23,000 for the first time. And while the artificial intelligence trade has hit some snags in recent weeks, it remains the dominant trend on Wall Street. Oracle shares are up 19% over the past month, while Nvidia is up 10.8% in that time. .SPX YTD mountain SPX year to date If the market continues its run-up, these cautious hedge funds will be forced to capitulate and take out long positions in ‘SPY’ or related futures to cover their cautious positioning. JPMorgan notes that on Nasdaq related names, the macro funds are keeping relatively normal positions, but that these speculative traders are still underexposed to the broader S & P 500 since the April tariff-induced market correction. If these hedge funds don’t want to report underperformance to their investors at year-end, they may have to chase the market here, adding more fuel to an equities rally. One of the more notable macro traders in history seemed to hint at this effect earlier this week on CNBC. Paul Tudor Jones discussed a “blow off” top that could start to take place. “My guess is that I think all the ingredients are in place for some kind of a blow off,” Jones, the founder of Tudor Investment, said Monday on CNBC’s “Squawk Box.” “History rhymes a lot, so I would think some version of it is going to happen again. If anything, now is so much more potentially explosive than 1999.” ( Learn the best 2026 strategies from inside the NYSE with Josh Brown and others at CNBC PRO Live. Tickets and info here . )
