Risk apetite indicator: no room for bulls?

I reproduced and updated a speculative position index which is a part of IMF Global Financial Stability Map. The index is constructed from the noncommercial average absolute net positions relative to open interest across a range of futures contracts covering most asset classes as reported to the Commodity Futures Trading Commission.

This indicator will rise when speculators increases its bets on futures contracts. Although in most markets speculators are basically trend followers, but they tend to get too bullish or excessively bearish near major highs or lows. In other words extreme positioning can send a warning of potential turning point in risk appetite.

This theory fits rather well to the attached chat. In the aftermath of Turkish lira crises in the mid of 06 the positioning has been reduced to low levels. Ahead of the first subprime shakeout in Feb 07 the risk appetite defined a net speculative positioning reach high values.

Now the chart suggest that despite recession talks the positioning remains surprisingly high suggesting that bulls are still alive and kicking.

I plan to improve the index and then to publish it on this blog every week.