Massive Market Shorts in Place

Hey, Ross here:

One group of traders have been massively shorting the market.

Should you be worried?

Take a look below.

Chart of the Day

These charts show how hedge funds have been positioned on a long vs short basis.

Look at the black line on the left. When it falls, these hedge funds are selling more than they buy.

The red boxes mark three big waves of selling this year. The latest came in October.

Now look at the chart on the right.

The blue line tracks their bets on stocks going up. The red line tracks their bets on stocks going down.

Inside the dashed circle, the red line has shot back up near its five-year high.

So these funds have been piling into bets against stocks.

But here’s the twist: To close those bets, they have to buy shares back.

If stocks rise instead of fall, their losses grow. That can force them to rush in and buy – pushing prices up even more.

If that happens, it means they’re buying to get OUT of a trade.

That’s what it means when they say short covering.

That’s very different from a fund buying a stock it wants to own.

Now back to the question…

Should we be worried because of how short the hedge funds are?

Now look, I won’t pretend there aren’t legitimate concerns with this market – from AI circular financing concerns to future rate hikes.

But hedge fund shorts are far from the biggest thing I’m concerned about.

I explain why below.

Insight of the Day

Big investors don’t all play the same game.

We talk a lot about following big money.

But a hedge fund and a stock mutual fund can be doing very different things.

Hedge funds can bet on stocks going up OR down.

Many stock mutual funds and pension stock portfolios mainly buy and hold shares. Their job is to choose which stocks to own.

And the money behind these groups is far from equal.

Taken together, traditional funds manage far more money than hedge funds.

When those funds buy heavily enough, they can overwhelm the short sellers and drive the stock higher.

That puts the shorts under pressure to buy back shares and cut their losses – adding even more fuel to the rally.

That’s why I like to follow the BIGGEST money.

Spot their buying early, and we can put that buying power to work for us.

That’s why in just a few hours at 11 a.m. Eastern today…

I’m going LIVE to show you how I follow these BIG money trails.

It’s the approach we’ve used to identify stock moves of 77% in 21 days, 51% in 15 days, and 87% in 24 hours.

I’ll show you exactly what I look for…

How you can apply it in your own trading…

And a few opportunity areas I’m watching right now.

Click here to guarantee your free seat if you haven’t already…

And I’ll see you in just a bit at 11 a.m. ET.

P.S. If you’re planning to attend on a mobile device, make sure you download the presentation app now so you don’t miss anything when it starts. See you there.

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Embrace the surge,

Ross Givens