Morgan Stanley: Monday's stock market takeoff was one big short squeeze
Large purchases were also seen in stock exchange funds (ETFs), where hedge funds also closed short positions opened early last week during the market downturn. The scale of growth of the S&P 500 on Monday (+3.2%) suggests that most of these shorts are already closed, the bank experts say.
The average profit of hedge funds in the U.S. stock market on Monday was 0.70-0.75%, which indicates, firstly, their wrong positioning, and secondly, the fact that their portfolios were few shares of cyclic companies, which became the engine of growth.
On Monday, March 18, the S&P 500 rose 3.2% and closed at previous highs (April 29). At the same time, the index was rising higher during the day. The trading volume of the S&P 500 index was the highest since April 30.
On Tuesday, the stock market consolidated, but on Wednesday resumed growth and reached new record values since March 6.