One of the most remarkable aspects of the 2023 year-end Santa rally, is just how powerful and stubborn the resistance against the meltup was among the hedge fund community, which as readers may recall, were selling and selling and selling, hitting a record 17 consecutive weeks of sales within single-name stocks, a liquidation frenzy that fizzled out in the last week of the year, only to restart anew in the first week of 2024 as we reported in "Largest Selling Since Mid-October": Hedge Funds, Long-Onlies Resume Dumping Tech Stocks At Furious Pace.
Then, in a surprising reversal - considering the stronger than expected payrolls report (even if the Household Survey numbers were an unmitigated disaster) and the hotter than expected CPI report - two weeks ago, when the all time high in the S&P was once again in sight, hedge funds finally reversed and started buying, with long buys outpacing short sales ~6 to 1, as flows pointed to re-grossing in Single Stocks which saw the largest long buying in ~10 months
And then sentiment and flows once again swung reversed sharply and unexpectedly, because even as the meltup accelerated in the second half of last week despite pervasive signs of imminent reversal (as some speculated earlier, it may all be about the Fed's net liquidity injections, which are about to end with a bang once the reverse repo is drained)...
