2026-01-07 04:30:09

Recently, there has been an interesting phenomenon—although the bearish logic for crude oil still remains, the issue is that the short positions managed by funds (including hedge funds, CTAs, etc.) have reached very extreme levels. This extreme positioning might just be the seed for a phase bottom in the first quarter.

Looking at historical data, there is a "reverse CTA" strategy idea: when the short ratio drops below a certain threshold, go long; when it rises above a certain threshold, go short. Backtesting shows decent annualized returns, but with obvious drawdowns. What does this indicate? It suggests more of a trading of "sentiment and position reversal" rather than fundamental-based pricing.

Another point worth noting—disturbances in Venezuela triggered a wave of pessimism, which may have been further amplified. But if the news situation later eases, short positions will definitely need to be covered, and at that point, oil prices could see a nice rebound window.

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Frontrunner

· 01-08 14:28

Short squeeze countdown? This wave of Venezuela's emotional manipulation is really a bit excessive. The decent annualized return of the inverse CTA indicates what—it's just gambling on human nature. I'm optimistic about the bottom at the end of Q1; once the news eases, the shorts will have to run.

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CryptoFortuneTeller

· 01-07 20:43

The short positions are so piled up that I'm actually starting to smell a bottom. Extreme positions are a contrarian indicator. Once the situation in Venezuela eases, the covering wave will definitely follow.

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LuckyHashValue

· 01-07 05:26

The short positions have accumulated to this extent, which actually seems a bit like laying the groundwork for the bulls. --- The reverse CTA logic sounds good, but the pullback is scary enough; it still depends on luck. --- The emotional slaughter in Venezuela feels exaggerated; if the news slows down, the oil will rebound. --- Extreme positions = opportunity? I am increasingly convinced by this logic. --- Just waiting for the moment when emotions calm down, short squeezes happen, and it’s a great feeling.

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OptionWhisperer

· 01-07 04:59

The short accumulation is so intense, it feels like a powder keg ready to explode with a single spark. Venezuela's situation is just the fuse; the real reversal depends on the positions. The reverse CTA strategy has some merit, it's purely a psychological game. The bottom signal is here, and the first quarter's suspense is quite significant. The most intense emotional moments are often the opportunities for a turnaround.

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BottomMisser

· 01-07 04:59

The short position is so extreme, it feels like a reverse thinking buy buy buy opportunity. Wait, if the situation in Venezuela really eases, oil prices could rebound at any moment. Once again, I was fooled by the fundamentals; I still need to watch for position reversals. Extreme positioning = bottom warning, I understand this logic. People always chase emotions; the bottom is in panic.

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BlindBoxVictim

· 01-07 04:59

The short positions are fully sold out, it feels like this rebound is just a matter of time. The shorts are so extreme, the bottom must be coming soon. Reverse CTA has some merit, it's basically betting on a sentiment reversal; the fundamentals are all fake. The situation in Venezuela, a pause and it should be covered; we'll see then. Extreme positions = opportunity, I buy into this logic. With such intense short accumulation, a rebound is hard to deny. History always repeats itself, and the play of sentiment reversal is always effective. It feels like there will be some movement in the first quarter; the key still depends on the news.

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IfIWereOnChain

· 01-07 04:54

The short position extreme is in place, this is the bottom signal. The logic of the reverse CTA is actually to gamble on emotional reversal. Once things ease up in Venezuela, oil prices will rise immediately, and the window is not far away.

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ResearchChadButBroke

· 01-07 04:43

When the shorts are fully crowded, a rebound is due. I only understand this logic after experiencing losses. --- The hype around Venezuela was overdone; the opportunity lies in the correction. --- Reverse CTA sounds like gambling on human nature; emotional reversals are the real gold. --- Extreme positions = bottom signals. I believed this once, but it kept falling haha. --- Waiting for the news to ease up, it feels good to see oil prices rebound. --- Basically, it's still about playing position games. Fundamentals and such are put aside for now. --- Is the first quarter the planting of the bottom seed? I'm waiting to see when this seed will sprout.

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LiquidityHunter

· 01-07 04:32

Short positions are so extreme... Are we really aiming for a new all-time high? I checked the data, and the net short position scale in the COT report indeed reached the percentile levels since 2016. The reverse CTA logic sounds like betting on a counter-impact during liquidity exhaustion; the annualized return looks good, but what about the drawdown... can you accept it? The news from Venezuela is essentially an emotional trigger. Once the situation eases, how much slippage could there be in covering? That's the data I want to see more.

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