Bearish Is How Strong Hands Are Hedged ~ The Risk Averse Alert

Thursday, April 29, 2010

Bearish Is How Strong Hands Are Hedged

The game remains the same as ever since March '09 bottom...

SPX 5-min

Strong hands continue taking every opportunity to squeeze weak shorts, while at the same time employing call options for the sake of:
  1. [slowly and deliberately] offloading unwanted long positions (the size of which obviously has diminished, as volume off early-February bottom amply demonstrates);
  2. hedging what now has become a ripe field of qualified short candidates.


Strong hands hedge. Were these bullish the CBOE Put/Call ratio would be trending higher. The 200-day moving average reveals quite the opposite, instead.

Thus, strong hands evidently are bearish. Short positions, indeed, apparently are being hedged with call options.

If anything, this is becoming more pronounced, and notably more decided, since early-February ...which is as one might expect this late in the market's counter-trend rally off March '09 bottom.

Fast Money
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