S&P Dominated By Hedge Funds

HEDGEThe wall of worry has gone back up and hedge funds don?t think U.S. stocks will get over it this time.

U.S. Stocks Stuck in Neutral Seek Spark From Fed After Flat Week Bloomberg

They?re expressing the view in futures tracking the Standard & Poor?s 500 Index, where bearish positions outnumber bullish ones by the most in eight months. Skepticism has crept into an exchange-traded fund tracking the gauge, too, as short interest has climbed to the highest since October.

Signs of market caution are growing as negotiations between Greece and the European Union break down and the Federal Reserve begins a meeting today on U.S. monetary policy. Bears who watched equities triple in six years have gotten bolder in a market that has gone two months without a weekly swing of more than 1 percent, the longest streak since 1994.

?Right now, the backdrop doesn?t seem all that market-friendly,? said Steve Sosnick, an equity risk manager at Timber Hill, the market-making unit of Greenwich, Connecticut-based Interactive Brokers Group Inc. ?There?s an inability to break out of this trend to the upside and a steady drumbeat of negative noise, which is leading people to trade the market from the short side.?

Large speculators held about 12,000 more short positions in S&P 500 futures than long ones through June 9, according to data compiled by Bloomberg and the U.S. Commodity Futures Trading Commission. That?s the highest amount of bearish bets relative to bullish ones since the five days ending Oct. 24.

Narrow Range

S&P 500 futures change hands on CME Group Inc.?s Globex electronic platform, which lets investors around the world buy and sell contracts on the benchmark measure for American equities. The futures are used to make short- and long-term wagers on the index and hedge other positions.

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