Hedge funds have been steadily adding exposure to exploration & production (E&P) stocks, and there could still be room for further gains. As of mid-June, net exposure in the MSXXENP Index is at its highest level in a year (98th percentile over the last 12 months), but it’s still only at the 66th percentile compared to levels since 2021. This reflects a transition from net short to slightly net long not a euphoric chase yet. The 10-day return on the E&P basket is roughly +7%, which closely aligns with the +11% move in WTI crude futures over the same period. That’s broadly in line with beta expectations (R² = 47% over the last two years), suggesting the rally hasn’t overshot. Technically, there’s no major divergence yet. Also worth noting: energy remains the largest net short exposure in 12-month momentum strategies, around -9%, with the short leg of these trades carrying a -13% weight in energy. In the most recent rebalance, energy saw the biggest increase in short-weighting setting the stage for potential covering if strength persists. If oil prices remain supported and the short unwind continues, E&P equities have further room to rally from both a positioning and momentum perspective. #EnergyStocks #CrudeOil #OilStocks #WTI #MacroTrading #EarningsSeason #Commodities #Quant #MomentumTrading #InstitutionalInvesting #HedgeFunds #OilExploration #InflationTrades #MSXXENP #CL1 #Markets #oil #hedgefunds

Next week’s trading week is set to be eventful and unusually compressed. Tuesday and Wednesday are stacked with key economic releases and central bank action, while Thursday marks Juneteenth (market holiday) and Friday could see thin participation due to many market participants taking a long weekend ahead of a triple witching expiration. Tuesday kicks off with a barrage of data: advance retail sales, industrial production, import prices, business inventories, and the NAHB housing index. Then on Wednesday, attention turns sharply to the Fed with the FOMC rate decision at 2:00 PM ET, followed by Powell’s press conference. It’s one of the most closely watched events of the month and could set the tone for the second half of June. With Juneteenth on Thursday and a summer Friday ahead, it’s highly likely traders and institutions will front-load positioning early in the week. Notably, Friday also marks a triple witching expiration (index futures, index options, and stock options expiring simultaneously), which typically adds volatility and volume—though it may be muted this time if liquidity dries up due to a quasi-long weekend. Looking ahead, July 4th (on a Friday this year) is just around the corner, meaning two holiday-shortened weeks are on the radar. In this context, next week’s window from Tuesday morning to Wednesday afternoon could be the most concentrated macro/market risk zone of the month. #FOMC #Powell #RetailSales #MacroTrading #TripleWitching #RateHike #MarketHoliday #FedWatch #EquityMarkets #HolidayTrading #OptionsExpiration #Volatility #SummerTrading #USEconomy