The Lockout Rally
Why Nobody Can Get In
Everybody sold. The market didn’t care. That’s the story right now.
The rally is locking people out and the positioning data tells you exactly why. Two datasets paint the picture clearly.
First, the Commitment of Traders. Speculators — the ones who are historically wrong at major turns — got short heading into the lows. They stayed short through COVID, they stayed short through 2023–2024, and they covered right before the tariff tantrum just in time to get short again. They’re not massively short right now like last year, but they’re not long either. Still offside, just not screaming offside.
Second, QQQ ETF flows. People panic-sold their Nasdaq holdings right at the lows on a 3-month rolling basis — the most aggressive outflows in a long time. The thing is, QQQ is just 100 stocks. Those stocks go up whether retail is buying the ETF or not. So the price rips and the people who sold are now watching from the sidelines.
That’s what a lockout rally is. Price moves faster than positioning can catch up. Shorts have to cover. Underexposed managers face career risk. Both of those create a bid underneath any pullback.
Not as strong as last year’s setup. But still strong enough to keep dips getting bought until the data says otherwise.
Action plan: watch COT updates every Friday. If speculators flip long at the highs, that’s historically when the music stops. Until then, the positioning supports the bid.
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