Smart Money

"Uncontained" - Greek Stocks Crash 17% As European Banks Plunge Most In 3 Years

Despite the Greek stock market being closed there is an option for hedging the exposure that all the smart money has been building to Greece in the past few days - GREK - the US-trade Greek ETF. In the pre-open, GREK is trading down 17%. While the best efforts of the SNB are underway to protect the markets from unease, European banks are suffering the exact 'contagion' that we were told numerous times would be contained... led by limit down moves in Italy.

The "Smart Money" Just Sold The Most Stocks In History

According to BofA's Jill Hall, "BofAML clients were big net sellers of US stocks in the amount of $4.1bn, following four weeks of net buying. Net sales were the largest since January 2008 and led by institutional clients—after three weeks of net buying, institutional clients’ net sales last week were the largest in our data history."

Signs Of Financial Turmoil Are Brewing In Europe, China And The United States

As we move toward the second half of 2015, signs of financial turmoil are appearing all over the globe. Slowly but surely, we are starting to see the smart money head for the exits. As one Swedish fund manager put it recently, everyone wants “to avoid being caught on the wrong side of markets once the herd realizes stocks are over-valued“.

Dumb Or Smart Money? Bullish Bets On VIX Highest Since 2008

There has been an odd trend of late in stock sentiment readings. Despite major averages that are near all-time highs, sentiment has dropped considerably across many of the measures we track. One such example comes from options trading on the VIX. The interesting thing about present conditions in VIX options is that the Put/Call Ratio (using a 21-day average) is at the lowest level since the summer of 2008. That means that there are more bets on a rising VIX versus bets on a falling VIX than we have seen in 7 years. And again, a rising VIX is associated with bad markets. Contrarians would say this is extremely bullish but history shows it is anything but...

These Are The 50 Top Hedge Fund Long And Short Positions

At the end of every quarter there is a scramble by the financial public to peek at what the biggest hedge fund holdings were as of 45 days ago. And yet, one wonders why: as Goldman notes, "the low dispersion market continues to challenge stock-pickers as the average hedge fund lags the S&P 500 for the seventh straight year (2% vs. 4% YTD)." In fact, even the barbarous relic known as gold has outperformed the average hedge fund YTD. Then again, as we have said since 2012, the only informational value comes not from looking at hedge fund longs, but their biggest shorts, since short squeezes remain perhaps the only source of major outperformance. So for all those curious, here are the biggest hedge fund shorts as of March 31, 2015.

Is This The Chart Of A Healthy Stock Market?

If fundamentals like profits and sales no longer matter, then all that's left is faith that central banks will never let stock markets fall ever againNever, ever; that is of course the language of fairy tales.

Presenting The $77 Billion P2P Bubble

"Loans take time to season and go bad, and Wall Street loves to package and pass along risk. The music will stop — it always does — and this will not end well.”

"Hedge!!"

Q: How do you make a small fortune on Wall Street?

A: Start with a large fortune.

~ old investing adage

When The Herd Turns

The ultimate hubris of central banks was their supreme belief in their own powers to direct the herd. As long as the herd was stampeding in one direction, the central banks could imagine that their shouted orders were directing the herd. But once the herd turns, the futility of those orders will be revealed.

5 Things To Ponder: Market Soup

Operating and reported earnings have turned sharply lower over recent quarters which has historically been associated with major market peaks. As shown below, it is also important to notice that revenue has tended to lag these downturns in earnings previously. This is because the measures used to substantially boost profitability from each dollar of revenue generated through accounting gimmickry, share repurchases, and cost cutting are finite in nature. When the effect of those manipulations fade, so does the inflated profitability generated from each dollar of revenue. This will be something worth watching closely over the next few quarters particular as the commentary of a "continued secular bull market" continues to hit the headlines.

The "Smart Money" Has Never Been More Bearish

The put/call ratio of open interest on S&P 100 (OEX) options has historically been a "smart money" indicator. The stock market peaked (anbd has drifted sideways for the last 6-7 weeks) since March 3rd saw an unprecedented string of bearish readings. The bearish OEX put/call readings have not relented, however. In fact, the bearishness has accelerated to an extreme level never seen before.