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Hedge Funds and Quants Stay Hard Skeptics on the Stock Rebound

  • Hedge funds, CTAs and volatility-targeting funds stay cautious
  • Short-covering may be the proximate cause for the recent rally

Fast-money traders have proved hardened skeptics on the heels of a once-in-a-decade stock rally, suggesting short-covering and bottom-fishing drove a market rebound that’s now losing steam.

As caution grips automated and discretionary strategies alike, trend-following quants and hedge funds largely stayed on the sidelines over the past two weeks.