Renowned Senior Commodity Strategist, Daniel Ghali, from TDS, highlights the ongoing short-squeeze play in Palladium markets, but warns of potential time decay on the horizon.
According to Ghali, recent Commodity Trading Advisor (CTA) buying activity has increased the likelihood of a long-awaited squeeze on algos. Simulations indicate the possibility of a significant short squeeze that could greatly impact algo shorts.
However, discretionary traders currently hold a larger short position than algos in Palladium markets. This group has nearly reaccumulated its record net short position, making it vulnerable if algo shorts face pressure.
Despite the potential for a short squeeze, there is a time decay in the current set-up. Unless there is a sustained rally in prices, CTAs may start selling by the end of next week, even in a flat market. This could alleviate some pressure on the substantial discretionary short position.
Analysis:
The article discusses the ongoing short-squeeze play in Palladium markets, with a focus on the potential impact on algo shorts and discretionary traders. While there is a possibility of a significant short squeeze, there is also a warning of time decay in the near future. This means that unless prices continue to rise, CTAs may start selling their positions, which could affect the market dynamics. It is essential for investors to stay informed about these developments to make well-informed decisions regarding their investments in Palladium.