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Bears Back to Maul Financials?


Ratios show that ursines are everywhere.

Having a little trouble labeling and sizing this chart. So let me explain.

I took the 10-day dollar volume of the SKF/FAZ combo and divided it by the 10-day dollar volume of the UYG/FAS combo. Each bar represents a day, starting in November at left and finishing on Wednesday at the right.

All volumes are adjusted for the leverage, so basically it measures the bearish bet in financials divided by the bullish one. It's a put/call-like number, so the higher ratio means more wood on the bearish side.

And the caveats:

This only goes back to November, so not much context there to know what's a high or low number. You get that with any ratio over any time frame of course, but this data is so sparse.
But all that being said, the ratio has tanked lately, and it's completely because the leveraged long bet has exploded. In fact, it's doubled since earlier this month, while the short-side bet has declined moderately.

So for whatever it's worth, something along these lines should be a contra tell, and the naked eye says it's modestly bearish here.

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