People are positioned badly again ahead of Fed

Discussion in 'Trading' started by detective, Jan 29, 2008.

  1. Being long ahead of the 50 bp bopper seems like the smart move but think about what the guys with the big money are doing.

    Most hedge funds are down. Most mutual funds are down. Down big. When the chips are down, what are natural instincts of most traders? That's right. To gamble. To go all in ahead of the Fed. The only way to hit it out of the ball park and come back from a horrible January. Almost no one is going all in on the short side, so what does that leave us with? Yes, desperate fund managers are going to the long side for a big gamble hoping Uncle Ben will provide the goods again and provide a huge rally like in September.

    Look for a sell the news reaction to 50 bp, with a possible late closing rally and look for apocalyptic selling on 25 bp cut. It will be totally brutal if there is only a 25 bp cut considering how everyone is positioned. But knowing Ben, he will give what Wall Street wants with the 50 bp cut to help his banker buddies.
  2. 50bp cut.

    And both short interest and bearish sentiment have been at extremes.
    Go back and check your sources.

    Shorts will be blown out of the water tomorrow.
  3. I don't think the Fed news will be as important as the ISM and NFP numbers due later this week. The Fed already did it's job last week with the 0.75 cut. Now let's see how the economy is doing in Q1. Is it imploding completely as bonds are predicting... or is it?
  4. Most hedge funds are net long. There are very few net short funds out there. This has been a brutal month for the hedgies, and they are gonna gamble on Uncle Ben saving their hide. Bearish sentiment as a contrarian indicator works when people are fearful like last week. Not that many people fearful of tomorrow, except perhaps possibility of 25 bp cut, but most are expecting 50 bp.

    Hedgies are going all in ahead of the Fed, buying financials and homebuilders, thinking this will dig them out of their hole this month. I see a sell the news reaction coming up tomorrow, with late day short covering on 50 bp. A repeat of December FOMC if just 25 bp cut.
  5. By down you mean that mutual funds are short?

    If so, mutual funds can't short by law, please be informed, you don't have a clue.

    Hedge funds are can't get so easiy in/out as we, retaliers can; because of the massive accounts they manage.

    By the way I'll sell tomorrow before the Fed meeting. Anything can happen, I don't gamble.
  6. Especially with this Fed.
  7. I mean down as in down. Negative. In the red. What does that have anything to do with being short? If the mutual funds were short, they would be up this month.

    And hedge funds can easily get in and out via index futures and options. I'm sure they are in a lot of liquid names anyway which they could dump easily like C, AAPL, etc.
  8. i am really hoping that the fed will say something stupid causing weakness and a buying opp.
  9. Most HF investors have been sold a pile of crap. Its blantantly obvious that they cant profit in all kinds of markets like they are supposed too.

  10. Do you think these elephants care what you graze?

    If they do not sell, nothing will happen to them. You don't mean thing to them even if you sold off everything. They own the markets and if they want to sell, there is nothing you can do.

    Better run with the elephants and its a wise word.
    #10     Jan 29, 2008