⚡ LEVERAGED LONGS AT ALL-TIME HIGHS: THE FINAL FRENZY?
The numbers don't lie. The market is hopped up on maximum leverage.
Leveraged Long ETF Assets vs. Shorts: 12.5x – an ALL-TIME HIGH. That's a 3x increase since the April low. Long ETF assets are near a record $146B, while inverse ETFs have collapsed to just $12B.
CONTEXT IS EVERYTHING:
· 2022 Bear Market Low: Ratio was 1:1. Maximum fear.
· 2020 Crash: Ratio was below 1x. Capitulation.
· NOW: Ratio is 12.5x. Maximum greed.
This is the polar opposite of fear. This is the market screaming, "NOTHING CAN GO WRONG."
WHAT THIS MEANS:
1. Fuel for a Parabolic Move: If the trend continues, this leverage will act as rocket fuel. The squeeze potential is massive.
2. A Tinderbox for a Crash: This is also extremely fragile. One sharp downturn triggers a cascade of forced liquidations. The resulting sell-off would be violent and deep.
THE STRATEGY:
· Respect the trend, but respect the risk. This is late-cycle behavior.
· Tighten your stops. Volatility will be explosive in both directions.
· Prepare for a violent deleveraging event. It's not a matter of if, but when.
The crowd is all-in on one direction. Smart money prepares for the reversal. Trade with extreme caution. The leverage ratio is a contra-indicator at extremes. We are at an extreme.