What a Week: Fed to the Rescue

Indeed, Weisberg and other traders were quick to say it's too soon to sound the "all clear" signal.

"We could have [a] nice oversold bounce, [but] a lot of guys are 'hedged and wedged' in stale positions, and it's going to take a while [to unwind illiquid positions], and it doesn't matter what rate the Fed is funding at," says Mark Dow of Pharo Management, an emerging-market-focused macro hedge fund with over $2 billion in assets.

Dow remains upbeat about the global economy. He said midweek worries that hit commodity prices and related producers such as Freeport McMoRan Copper & Gold (FCX Quote - Cramer on FCX - Stock Picks) were not about deteriorating fundamentals, but "short-term positioning" by speculators and "guys shedding risk" in assets they can sell, since many are holding assets they cannot move.

Still, he expressed concern about two major issues.

Center of the Storm

First, banks are on the hook for loans they've committed to finance many private-equity deals. Dow's sources say it will take about six months to work through the backlog of such "hung loans," and that's assuming the economy doesn't slow.

"If the economy slows down, that's a nightmare scenario," Dow says, noting banks are being further squeezed by concerns about exposure to hedge funds. "They want to sell hedge funds the deals they're hung with. I'm sanguine [about the economy] but there's a ton of uncertainty."

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