Short-Covering Hedge Funds, the End Is Near for You!

NEW YORK (TheStreet) -- The short hedge fund community continued to cover their short positions at the market highs on Thursday. The DJIA finished up 10 points at 16543 and the S&P 500 closed up 4.46 at 1892.49 after briefly flirting with the closing all-time high of 1897.45

The Nasdaq finished the day up 22.80 at 4154.34 while the Russell 2000 closed at 1113.87, up 10.24.

Without sounding like a broken record, the S&P 500 Trust Series ETF (SPY) volume matched its yearly low volume in 2014, trading 60.8 million shares. That matched the Jan. 22, 2014, volume. Once again, where is all the buying conviction in this market if we are near the all-time highs?

There is something wrong and out of sync. As a matter of fact, the volume on Wednesday, an up day, was down 9% against its one-month average and down 31% against its three-month average. It was much worse on Thursday, another up day. The volume on up days is dramatically lower than on down days. It matters.

From my perspective, this all comes back to the short hedge fund community that sells the market lows and cover at the market highs. This is, quite frankly, pathetic. I will never understand why these hedge funds act in unison and sell the lows and buy the highs. It is no wonder why the majority of hedge funds have a difficult time beating the market returns.

Buying high and selling low never seemed to be a recipe for success.

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