Adjusting

The markets continued to adjust to Fed participation and hedge fund balancing today. Several references have been made to the August 15 notice day for hedge groupies who want their money back in 45 days. Material changes in market perception about risk will limit the ability for certain positions to recover. Those bad positions have to be hedged and or liquidated through various manners that will ultimately keep a lid on potential upside moves. The global hedge geniuses have blamed market abnormalities for the reason their long side went down and their short side went up. Which is another way of saying the relational spreads went irrational, just like the managers who originally thought of the trades. Now hopes rest on the ability to adjust positions without big downside interference.