The stock market has been on a volatile ride as of late to say the least. Concern is growing that the Federal Reserve’s attempt to control inflation could have unforeseen and perhaps disastrous effects, as the central bank steps up efforts to do so, sending the dollar skyrocketing and bonds and equities into a tailspin which also affect pretty much everything else around the world.
In the chart below the Put volume is still very high as of the last trading day. According to Investopedia “An extremely high put-call ratio means the market is extremely bearish. To a contrarian, that can be a bullish signal that indicates the market is unduly bearish and is due for a turnaround. A high ratio can be a sign of a buying opportunity to a contrarian. An extremely low ratio means the market is extremely bullish.”
HEDGE FUND OUTFLOWS
Hedge fund outflows are also something that is bring up concerns across the board. According to Reuters “Investors putted an estimated $26 Billion from Hedge funds during the third quarter according to data provided by HFR.
In addition, the second quarter had a $27.5 billion outflow, marking the first time since the peak of the COVID epidemic which was in 2020 that hedge funds have seen consistent withdrawals from one quarter to the next. Conditions are as bad or even worse in some areas of the markets since what we have seen during the 2020 lockdowns.
This high number of outflows are higher than average and could indicate a more sustained bear market could be ahead for investors