The big story today is short sellers got poleaxed at the open in unrelenting buying. We had names +15% on no news, fucking the long-short hedge fund managers into early coffins.
Now the chasers are being beaten across their faces, as the $SPY ebbs into the red.
So what is the play?
My suspicion is this is a trap. We have markets diving lower and the water is once again inviting for the bears. However, bear in mind several things here.
1. the dollar is 1.02% v the euro. It was down more, but still down as we price in rate cuts.
2. Gold, silver, oil and copper are all sharply higher because of the dollar.
3. Massive gamma squeeze took place due to heavy short positions amongst the first class citizenry in asset management.
4. The Russell is still +2.3%
How am I responding?
I was long but in defensive stocks at the open and had to cull them early. My gains ranged from +0.8% to 1.3%. When markets broke lower I hedged and then began to sell off my longs as we ticked lower. When hedged, each time I sell a long increases my short exposure, obv.
About an hour ago I went NET SHORT at 25% of holdings, $UVIX, $TZA, $FNGD. $LABD — but now I closed them all out for handsome gains (+2.1%, +0.8%, +2.4%, +1.5%) leaving me with longs and 60% cash.
BOTTOM LINE: the thrashing back and forth is due to an ideological battle taking place with chasers against non-chasers. Ultimately, the chasers always win and if forced to bet here — I’d bet on 10 green candles into the close followed up with a +100 NASDAQ tomorrows to insert the final dagger into the heart’s of the bears for 2023.
+63bps in highly professional trading.
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