Patient Bears Sees Long Equity Hedging Signaling a Bounce ~ The Risk Averse Alert

Wednesday, August 18, 2010

Patient Bears Sees Long Equity Hedging Signaling a Bounce

Over the course of about the past year ... as the market's counter-trend rally off March '09 bottom came nearer its peak ... and then turned over ... there have been bottoms from which the market has bounced ... and these are in focus tonight.


All of the noted bottoms save one (May 7, 2010) were lows set within a counter-trend rally. That's the common theme here.

This matters because within the market's counter-trend rally states over the past twenty months there appears a well-established measure of long equity hedging coinciding with the above noted bottoms...


And here we are again.

OEX 5-min

Be that as it may, added pressure might appear before ultimate bottom is reached. Still, with hedging of long equity positions via put options elevated here, it's more likely any prospective challenge of recent lows will be defended.

Is the immediate urgency to raise capital weak hands have been experiencing lessened now that Treasury is actively seeking to install new engines powering the Bernanke helicopter fleet?

Fast Money
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