It was a very ugly week for stocks, one which saw the S&P 500 trade lower for 6 straight sessions (its 3rd straight week lower) with the Nasdaq even uglier, dropping 6 of the past 7 weeks - as investors digested geopolitical uncertainties, a higher for longer rates regime, and ongoing Q1 earnings. Bond Proxies, Regional Banks, and Defensives outperformed on the week, while Bitcoin Sensitive Stocks, AI Enablers, and 12-Month Winners underperformed.
And yet, amid the overall risk-off sentiment, one which pushed the S&P briefly below 5,000 and hammered tech and momentum stocks, Goldman's Share Sales Trading desk spotted a massive divergence: whereas Long Only funds (aka Vanilla mutual funds) puked just as stock were tumblinf, leading to the largest LO sell skew of the year, Hedge Funds were unleashing a BTFD frenzy, translating into the biggest buy skew of the year! Indeed, the HF buying bonanza was also observed by the bank's Prime Brokerage, which notes that after hedge funds net sold from Friday until Tuesday, they then bought the dip ahead and after the staged Iranian retaliation on Israel, when futures tumbled overnight only to stage a dramatic recovery on Friday.
