Facebook Twitter Gplus YouTube E-mail RSS
Home Market Comments Active Bear Outperforms Short of SPX

Active Bear Outperforms Short of SPX

Published on August 2, 2012 by in Market Comments

In an up trending market HDGE an actively managed bear fund, and SH an inverse of the S&P 500, tend to move together and paint similar chart patterns.  HDGE, however, under performs in an up trending market.  During the rally from last October’s low to early February HDGE was down roughly 30% while SH was down only about 21%.

In mid February as the S&P 500 was continuing to rally, HDGE started to out perform SH.  Both bear positions were still falling, however HDGE slowed it’s decline.  Then at the first of April as the market began to fall both securities started to rise.

The small rally into the the first of May brought the arrival of big divergence between HDGE and SH that has continued until today.  This isn’t a good sign for the markets as  it signals to us that market participants are separating the good stocks from the bad.  It is often one of the first signs of a weakening market so we’re watching this carefully. What makes us even more concerned is that July of 2011 saw the same divergences…just before the market fell 16%.


Tags: , , ,
 Share on Facebook Share on Twitter Share on Reddit Share on LinkedIn
No Comments  comments 
Add Comment Register

Leave a Reply

Your email address will not be published. Required fields are marked *

HTML tags are not allowed.