davenerven

Was Friday's Rally Just a Hedge Fund Short Squeeze?

Margin calls are a distinct possibility but one should be aware that firms behind the Lehmans CDS had to find $400+billion by last Friday to settle their liabilities. The only source of cash is to liquidate stocks, so they did and they have settled. But now their counterparties now have $400+billion and the logical thing to do is to squeeze all the shorts dry. Think about it. Many short hedge funds could be belly up over the next few days.

Was Friday's Rally Just a Hedge Fund Short Squeeze?

So hedge funds had to cough up $400+ billion to pay for their Lehman's CDS positions. The market was very very nervous of more defaults before the settlement last Friday, but it looks like it's all been settled in a fairly orderly manner. Now one side is down $400+ billion and the other side is long $400+ billion. My guess is that the side that's now long $400+ billion is going to use their new cash to squeeze the heck out of the market shorts and make more money. What can be a better time to do this than now? So, perhaps, just perhaps, we can expect the rally of a lifetime soon as the shorts run for cover from a tsunami of buying. But, I might be completely wrong. Still, it is a scenario that makes sense. The world governments have done more than enough to unlock credit but I think credit was tight because of concerns over the Lehman CDS settlements. Now that is out of the way, anything can happen, which means that everything will probably happen all at once.

A 'Buy the Loser' Rally

Time to hurt the shorts, I say.

Read this please. It's worth your time, I promise.

www.deepcapture.com/

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And another site about the subject:

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