On analysis of the movements of the futures, I find that the hedge fund default could create chain-reaction in other global equity markets; as the big bulls are likely to come under scrutiny due to the grim situation of banks with billions of dollars losses due to default on margin calls. Credit Suisse (NYSE:) said that a fund had “defaulted on margin calls” to it and other banks, meaning they were now in the process of exiting these positions.
I find that the big bulls have already sensed the depth of the losses to banks, well in advance, and are forced to sell their stocks in block trades sooner or later; this could lead to a big jolt in not only U.S. equity markets but in other global equity markets too. Despite the fact that the whole quantum of the losses to major banks is still not exactly known but this could lead to a major sell-off in global equity markets shortly. Currently, the S&P 500 fFutures showing extreme weakness because the depth of the currently prevailing financial crises could lead to further chain reaction blasts in global equity markets.
Despite a rebound in S&P 500 futures, weakness is still persisting at the current levels due to prevailing skepticism over the reactionary moves by other hedge funds. I find that if S&P 500 futures take a sustainable move below 3822 before this monthly closing, a steep fall could continue during the next two months.
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