CHART OF THE DAY | Hedge Funds: A Recession In Contrarian Thinking

Editor's Note: Below is a brief excerpt and chart from today's Early Look written by Hedgeye CEO Keith McCullough. Click here to learn more.

"... If it wasn’t positioned too bullish in January 2016, we wouldn’t have A) seen the worst JAN ever and/or B) seen the crowd sell last week’s lows. And if they didn’t sell last week’s oversold lows (new weekly closing lows), we wouldn’t have had that kind of a bounce!

 

This is the point.

 

  1. The oversupply of fund managers who are selling low and chasing high (chasing momentum) is unprecedented
  2. Hedge Fund return correlation to US Equity Beta is at an all-time high (see Chart of The Day)
  3. And the amount of leverage hedge funds are using vs. daily market liquidity is also unprecedented"

CHART OF THE DAY | Hedge Funds: A Recession In Contrarian Thinking - 02.18.16 Chart