Elazar was launched in 2004 by Chaim Siegel and has served famous hedge fund clientele who demand a keen understanding of drivers of individual companies and financial markets. Chaim twice worked for renowned trader Steve Cohen of then-SAC Capital (now Point72). He was also a partner at JLF Asset Management which was funded by George Soros. Previously he was one of seven analysts on a $13B mutual fund at Morgan Stanley Asset Management. Elazar Advisors publishes its research into the Reuters/Refinitiv Institutional Platform and Factset where Elazar's earnings estimates are factored into the Street earnings numbers.  Elazar's research is used regularly by fundamental and algorithmic traders and investors at some of the largest mutual fund and hedge fund managers in the world. Chaim has been a 5-Star top ranked analyst in Tesla and other big cap tech companies. Try us with a  free trial here . All investments have many risks and can lose principal in the short and l

Stock Market: China Risk and Hedge Funds Maxed Out

Here's some of the notes we told subscribers today. They receive this and other reports daily on tech, trading and markets including stock picks and timing calls. To see our full comments along with specific stock picks click here.

We managed to be pretty hedged on Friday in our model portfolio. We'll have to see what this follow through is from China.

What's holding up the market is the barrage of Fed buying which we're tracking daily.

The repo market volatility and follow-on Fed support is likely in response to too many hedge funds using the repo market to fund their leverage. This is a problem, but I think only a problem when the Fed stops supporting this market.

Hedge funds were caught off guard in September and had no choice but to bid up the market when funds dried up. They had been getting funds at very low rates to fund their leveraged portfolios and then had no way to fund their portfolio when there was nobody on the other side to lend to them. Either they needed funding or they'd have to liquidate their positions.

This is a problem whenever the Fed stops lending in the repo market. I think the Fed is going to try to gradually pull back with bogey dates of April 15th and June.

They kind of have to pull back. They saw that the first rounds of quantitative easing in the 2010s can't be reversed. When they tried to reverse QE they crashed markets in late 2018.

So my guess is they're going to have to try to find a way to slow these current repo support purchases. As we've been saying they plan to slow them into tax season April 15th but I've also read as far out as June.

Nonetheless like I've been doing daily in our service is calling out just how much the Fed is spending each day. So far it's been strong. But it needs monitoring.

As long as the Fed's in there hedge funds have no imminent reason to sell.

BUT, If I were a hedge fund depending on this and saw the news I would already start cutting back my exposure before the Fed's soft April deadline for repo support. That can cause some volatility at some point. It can also cause a down day to be a big down day. Friday was very tame. Not bad.

But if the China virus causes problems to economies, there's enough hedge fund firepower concerned about funding that could need to get out.

The China virus scare can slowdown travel and the economy in China, the US and globally. This is real. And combine that with highly leveraged hedge funds I think we need to respect markets.

I'm adjusting somewhat. I'm only going to be long when the market looks good to me and be neutral when the market doesn't look good. If I see the market start turning down I will start to be net short. For now no.

I think it's a good time to have stops on longs that are working especially if they are more trades rather than investments.

Give us a shot with a two-week free trial. Top ranked big cap tech stock analysis and strong risk/reward stock timing and market calls. Trade With A Pro. Click here to find out more.

We just spoke to a ton of companies. See what are take is and what stock's we loved, liked or didn't like. We recently spoke to QCOM, SQ, TER, MSI, TTWO, ATVI, ROKU, AAPL, TTD, TWTR, SWKS, TSLA, FTNT, ANET, INTC, TWLO, WDC, JNPR, SPLK, MSFT, LRCX, FB. Any questions on them let me know.

All investments have many risks and can lose principal in the short and long term. The information provided is for information purposes only and can be wrong. By reading this you agree, understand and accept that you take upon yourself all responsibility for all of your investment decisions and to do your own work and hold Elazar Advisors, LLC, and their related parties harmless. All trades are hypothetical to show rating and opinion. All trades exclude relevant transaction costs. We have no holdings in the stocks mentioned unless otherwise noted.

Sign Up To Get Select Tech and Market Calls From Us, Free To Your Inbox

Contact Us


Email *

Message *