The Market Purge Is Not Over
The positioning trap
The great market purge is underway. Hedge funds are puking AI longs, systematic strategies are getting slaughtered and Goldman's risk indicator has collapsed. But don't mistake pain for capitulation. The machines may have more selling to do. Meanwhile, volatility is finally waking up, the crowd is chasing expensive protection and the market's downside tail is getting uglier. Is this the mother of all positioning resets or the beginning of something much nastier?