Will Hedge Fund Redemptions Sink the Market Lower?
Two weeks ago, I discussed about the positive divergence in SPY chart. I said that we could be looking at a more sustainable rally in the bear market. Indeed, we managed to sustain the rally for about 1 week. We never have one for more than 3 days in a long long time. I also caution about resistance at 100 level. The SPDR Trust (AMEX:SPY) turned down from there and we are now close to retesting the Oct's low. If we do break these lows, next level of support would come in around 75. See monthly 10 year chart below.
Are the selling these few days related to hedge fund redemptions? According to a slightly dated article from MarketWatch:
"Many hedge fund investors can withdraw money on Dec. 31. Some funds require that redemption requests be submitted 90 days ahead of time. That means requests have to be in by Tuesday. Other funds require 45 days notice, so there may be another round of withdrawal requests toward the middle of November."