Schizophrenic Markets

The market is exhibiting a sharp divide between aggressive retail equity buying and cautious institutional hedging, with short exposure at 10-year highs. Extreme leverage and low cash levels suggest a stretched environment prone to volatility.

Key Takeaways

• 1.Retail investors are engaged in panic-buying of equities while institutional investors remain cautious and are trimming exposure in crowded trades.
• 2.Hedge fund short exposure has reached fresh 10-year highs despite leverage being at 5-year highs.
• 3.Cash levels among fund managers have dropped to 3.9%, which historically triggers a Bank of America 'sell signal'.

Table of Contents

• Schizophrenic
• The big short
• Spot up, vol up
• Far from euphoria
• Retail roaring
• Be bullish
• Cash is trash
• Just in time
• MOMO puke
• Crowded semis
• Shaving off semis

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