Pascal
12-10-2013, 01:07 PM
The 20DMF is weak today, while commodities based stocks attract money.
This is another proof of the pair trade situation that most funds are in.
This is because the Fed has boxed the funds into identical positions: be long equities in general, but because they have risk management rules, these long positions must be hedged. Funds have this shorted commodities based equities because when the Fed tapers interest rates will rise and commodities will crash.
This theory is entirely correct, except that when everybody is on the same trade, the outcome is not what most expect. It is just the opposite: when they sell their long equities, fund will have to cover their shorts and this will - and is right now - pushing commodities based stocks higher.
By the way, PETM is somehow under selling pressure.
SCCO looks fine for now.
Pascal
21220
21222
21221
21223
This is another proof of the pair trade situation that most funds are in.
This is because the Fed has boxed the funds into identical positions: be long equities in general, but because they have risk management rules, these long positions must be hedged. Funds have this shorted commodities based equities because when the Fed tapers interest rates will rise and commodities will crash.
This theory is entirely correct, except that when everybody is on the same trade, the outcome is not what most expect. It is just the opposite: when they sell their long equities, fund will have to cover their shorts and this will - and is right now - pushing commodities based stocks higher.
By the way, PETM is somehow under selling pressure.
SCCO looks fine for now.
Pascal
21220
21222
21221
21223