Former JP Morgan strategist: S&P 500 rising 10% is not due to fundamental strengthening, but rather CTAs funds stocking up.

The price of crude oil has gradually fallen back to the level seen in late March, remaining in a relatively stable range, while the S&P 500 index has surged by about 10% during the same period. This divergence has attracted high attention in the market. Former chief strategist and global head of research at J.P. Morgan, Marko Kolanovic, pointed out that the strong performance of the stock market in this round is not due to substantial improvement in commodity fundamentals or fundamental improvement in geopolitical situations, but rather driven more by adjustments in internal positions in financial markets and systematic trading flows. He emphasized that this rise, independent of macroeconomic catalysts, reveals potential mechanized characteristics in the current market pricing mechanism. In this wave of market rallies, Commodity Trading Advisors (CTAs) with trend-following as their core strategy have played a key role. Kolanovic's analysis indicates that these funds had generally low allocations to stocks in the past, and with technical signals in the market strengthening, CTAs were forced to increase their stock exposure based on algorithmic instructions, creating significant additional buying pressure. This mechanized reallocation process often has a "chasing momentum" attribute, where price increases trigger buy orders, and the buying behavior further strengthens the trend, forming a self-reinforcing positive feedback loop. It is worth noting that Kolanovic has been one of Wall Street's most famous "big short" investors in the past two years, repeatedly predicting market crashes due to high interest rates and geopolitical pressures, but US stocks have continued to reach new highs. According to reports, the strategist has already left J.P. Morgan last year.