![]() ![]() As alarming as Fed policy makers all sounded, inflation data due Tuesday is likely to show weakening prices from generational highs. The whole year has been a dangerous one for bears and bulls alike. “Although a good deal of Fed tightening has been priced into the market, the stubbornness with which higher interest rates may be maintained in the face of a deteriorating economy has not been sufficiently taken into account.” “Bears will retort that gains were held only fleetingly, and relied a great deal on short covering,” said Michael Shaoul, chief executive officer of Marketfield Asset Management. Meanwhile, more than $10 billion was pulled out of equity funds, data compiled by EPFR Global show. estimate derived from public data on exchanges. During the week through Tuesday, they sold stocks for the first time since June, according to a JPMorgan Chase & Co. ![]() Now, retail investors, one of the staunchest dip buyers in the post-pandemic era, are reconsidering their bullish stance. This year, cash holdings have risen in mutual funds, and hedge funds’ equity exposure hit multi-year lows. Technically driven demand defied the growing drumbeat of Wall Street warnings and overshadowed what’s increasingly a bearish army of fundamental-based investors. ![]() basket of the most-shorted stocks over the week. The need to cut losses forced an unwind that led to an 8.2% jump in a Goldman Sachs Group Inc. Short sellers, whose wagers looked prescient during the 2022 bear market, were caught wrong-footed as stocks bounced back. Over the week, they were mostly mired in a “short gamma” stance that requires them to go with the prevailing market trend, McElligott said. Volatility control funds, for instance, snapped up $2.1 billion of stocks on Thursday alone, according to an estimate from Charlie McElligott, a cross-asset strategist at Nomura Securities International.Īs the market marched higher, it turned another set of price-insensitive players into buyers: options dealers who took the other side of derivatives trade and would need to buy or sell underlying stocks to maintain a neutral market exposure. The Cboe Volatility Index slipped for a second week in a row.įor rules-based traders, a calming market with favorable momentum is a green light to go long. After managing to close above the threshold during a retreat Tuesday, the S&P 500 embarked on a three-day rally.Īlong the way, the benchmark index reclaimed other key trendlines, including its 100-day and 50-day averages. Others pointed to the S&P 500’s buoyancy itself as a catalyst for further gains.Īt the center of the bounce is the battle line of 3,900, which acted as a support in mid-May and then kept a lid on advances briefly in June and July. Some cited a retreat in dollar as another factor behind stock resilience given that the recent chaos in the currency market supposedly created pressure for money managers to rein in risk. A growing number of economists see a hike of three-quarters of a percentage point as the likely outcome. This week’s advance came at the same time when Powell said Fed officials won’t flinch in the battle to curb inflation, hardening expectations that they’ll deliver a third straight jumbo rate hike later this month. While advice not to fight the Fed has generally been sound in 2022, it has occasionally run into trouble when bearishness started to boil over. There are a lot of funds betting the markets are going to drop.” “Markets are set up for a very good fourth quarter. “There is just a huge negative bias for the market right now and that is an extremely contrarian signal,” said Slimmon, global equity manager at Morgan Stanley Investment Management. While it is debatable how much bad news is priced into 2022’s bear market, the prevailing skepticism toward stocks makes Andrew Slimmon optimistic. Up 3.7% over the holiday-shortened week, the S&P 500’s advance flew in the face of Federal Reserve Chair Jerome Powell’s persistent hawkish message. Combined, these players helped the market overcome a fresh wave of selling from day traders and fund investors. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |