Looking at the action, the hedge funds who have been playing mean reversion strategies like put selling are under a lot of pressure here. Also the quant funds are in pain right now, and leveraged. These bozo hedge funds leveraging out to crazy amounts to make their "riskfree" 1% a month are in a lot of point. The best strategy right now is probably shooting at these funds, knowing they HAVE to sell here.
If you don't know the popular hedge fund names, then you obviously are not in tune with game. Let's just say that sector starts with an E. As for specific names, just look at the stocks with big volume in that sector.
I think you are a little late. Many of these funds have already sold their most liquid positions and hedged the rest. The thing to do was watch for really crappy stocks that were experiencing run ups, these were the stocks that the quant funds were closing their shorts on. The overall direction is still probably down, but the chance to exploit quant fund selling is over, unless you work at a prime broker and know which positions these funds still have on I doubt you have much of an edge. Follow the larger trend and sell the short parabolic rallies. -Neo
Today there is going to be heavy selling in that sector. It is not too late now. I would not be short on options expiration day however for various reasons.
Agree. I sense a parabolic rally to blow out all the bandwagon shorts is approaching - THAT will be when to aggressively short - aggressively shorting after the drubbing the market has taken and hoping for a 1929 scenerio is poor risk/reward in my opinion.
Parabolic rally? If you're talking about what happened early last week, that's wishful thinking. <i>Everyone</i> is looking to sell the rally, which means that there isn't going to be much of a rally to sell into. If you're waiting for a parabolic rally to sell, you gonna have to wait a long long time and you'll probably be shorting the rally off the bottom then.
Whatever - we'll talk again in a week or two and see how things play out. You have your opinion and I have mine.
When you say "Everyone", to whom are you refering? Is it scalpers, position traders, or investors? It makes a whole lot of difference on which time scale you are looking at when selling short rallies. For the record I am talking about scalpers... -Neo
Scalpers, shooooooooooooot,...of course there will be your 10 point rallies on the S&Ps, I am talking from a swing trading perspective, moves from 3-4 days to a few weeks. Hedge funds are gonna be selling all day. Don't get your hopes up.