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Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: stan_hughes who wrote (338350)	7/12/2007 4:30:19 PM
From: MythMan	Read Replies (2) \| Respond to of 436258

Maybe this story from the other day fueled today's action >>Hedge Funds Shorting S&P 500 at `Crowded Levels,' Merrill Says 2007-07-10 08:03 (New York) By Alexis Xydias July 10 (Bloomberg) -- Hedge funds are short-selling Standard & Poor's 500 Index futures by the most in three years, a Merrill Lynch & Co. analyst said, and recommended investors buy the securities before the funds have to settle their obligations. ``Large speculators'' had the biggest short-interest position on the contracts in the week through July 3 since mid- 2004, Mary Ann Bartels, Merrill's chief market analyst, wrote in a report to clients today. The bets, which speculate that the index is going to fall, require about $45 billion to buy back the securities for reimbursement, she estimated. Short positions have reached ``crowded levels'' and ``we view this as a contrary indicator and readings continue to be bullish for stocks,'' Bartels wrote in a weekly note on hedge- fund activity. ``Short levels provide a floor on price.'' Merrill, the world's biggest brokerage, used data provided by the Commodity Futures Trading Commission's weekly Commitments of Traders report. In a short sale, investors borrow securities to sell on the expectation they will be able to buy them back at a lower price. The amount of short-interest positions on the New York Stock Exchange climbed last month to 3.3 percent of total outstanding shares, the highest since the exchange starting providing the date in 1995. Each share that is borrowed creates a repurchase obligation that may lift prices, a process that is known as ``short covering.'' Bartels' team, based in New York, tracks hedge funds' investments in index futures for the S&P 500, the Nasdaq-100 and the Russell 2000 Index to produce so-called technical and quantitative analysis. Bartels and Shan Hasnat, the other analyst who wrote the report, weren't immediately available to comment. Short positions on the Russell 2000, a benchmark for U.S. smaller-capitalization stocks, fell in the week to the lowest since at least 2002, the Merrill report showed. The S&P 500 has almost doubled since October 2002, when it was at its lowest level in 5 1/2 years. --Editor: Borise