Skip to content

Signs of Seller Exhaustion Left Stocks Primed for a Big Bounce

  • Hedge-fund exposure at five-year low while retail dumps stocks
  • It extends pattern where positioning overshadows market moves
Bloomberg business news
Morgan Stanley's Wilson Says S&P 500 Slide to 3,000 'Very Achievable'

A pattern has persisted in stocks the past year. A downdraft steepens, sellers get the selling out of their systems, and the market is left poised for an often-powerful jump.

Friday’s surge, which spared the S&P 500 from a fifth straight down week, bore all the hallmarks of that routine, coming amid a boatload of evidence that investor risk appetite had been cut to the bone. A measure of equity exposure among hedge fund clients fell to a five-year low, while retail pessimism was also intensifying, according to JPMorgan Chase & Co. data.