Got several positions going short on subprime heavy builders and loan co's that cost me dough today. Tried to sell some positions Monday morning & the bid kept going up. Other than being oversold & the appearance they were beat up, is there any other reason these stocks went up today (& my options down) while the majority of regular stocks went down based on the crappy subprime environment? I anticipate these shorts making coin in the near future but was somewhat surprised that the stocks hung in there today.
Multiple hedge funds (esp "market neutral") are in distress right now and liquidating positions causing dislocations in various areas - probably covering alot of their shorts in that sector to raise cash. That's my take FWIW.
Well not referring to the homebuilders but just about every other stock out there you finally cleared up my only mystery to what was going on here lately. I have been trading these stocks that have crappy earnings and growth the last few days to the upside. Even though I am a chart player I do alot of research on whats going on for the whole picture of the economy. For 2 days I have been scratching my head think why in the hell are sh*t companies exploding to the upside? It totally slipped my mind that the Hedgies had to possibly cover their massive shorts in order to line up there liquidity issues. I normally catch these things easily, but this one trumped me for 2 days. Thanks for the insight for now it all makes since. Its kind of scary to think of though, for it means their could be a even bigger liquidity issue than I originally thought. Anyways great reply and observation.
dead cat bounce the last couple of days...the vols are exploding on these guys...sell options, never be a buyer during a swan event! the straddles you can sell on these guys are epic!