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Morning Commentary

Hedge Funds Load up to Downside

By Charles Payne, CEO & Principal Analyst
8/22/2022 9:51 AM

The market will be. much lower this morning, which is par for the course since 1950.  But there are other aspects at work this morning.

Mounting anxiety about the Fed’s next move, and Jay Powell’s comments at Jackson Hole on Friday are adding pressure. But the Fed is a long way from their stated 2% goal.

The End of Summer

The summer rally has been one for the record book. Many investors are looking at the fall, which this year becomes more complicated due to midterm elections.

Historically, this is a good week for stocks. But there are a couple of wild cards beside the Federal Reserve.  Hedge funds and shorts making big bets.

Hedge Funds Loading up for Destruction

Hedge funds and leveraged fund have dramatically increased their short positions

Technical View

The S&P 500 is vulnerable to 4140; where it fills a huge gap and might reverse for a moment.

The NASDAQ has a closer gap, that will fill sooner, but I think the key support point is around 12,200.

The total US stocks market failed to get through the 200-day, and for many, that served as a sell signal.

Portfolio Approach

We closed two positions in Consumer Discretionary in our Hotline Model Portfolio this morning.  In addition, we are suspending our Current Buys.

It’s going to be a tough morning, but these are the tests markets must endure during bear markets.


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