Best Shorting Opportunity of 2010 Says Technical Strategist Robin Griffiths

Today we're presenting commentary from Cazenove Capital's technical strategist Robin Griffiths. In an interview on CNBC a few weeks ago he said that we are approaching the best shorting opportunity of 2010. Given that last week we covered the bullish case for equities, we wanted to present the other side of the coin.

Technically speaking, Griffiths feels that April 2010 marked the "top" of the year-long rally that began in March 2009. As such, he is cautious, simply stating "do not put risk on." Ever since this top, the market has been in a downtrend and he feels the only way he would switch his stance is if the market blasts through the April 2010 high. He also points out that the next four months are typically the weakest of any in a year. He doesn't think that the market will break through its early August highs either (around current levels at 1125 on the S&P 500).

He feels the market will break the July low and can see a 10-15% fall. Specifically, he is targeting 940 on the S&P 500. If you were looking to trade around his comments, it would seem that shorting and placing a stop at the April 2010 high would mirror his take. Now, do keep in mind that it has been two weeks since he made this commentary. However, his stance is still relevant given that the market is sitting at levels that still sit within his parameters. It appears as though to the two main levels to watch on the S&P 500 are 1020 for possible support (July low) and 1220 for resistance (April high).

Embedded below is the video of Robin Griffiths' commentary at CNBC. Email readers will need to come to the site to watch the clip:



So, a bearish argument based on technical levels of support and resistance. For a completely converse look, last week we presented the bullish case for equities.

Cazenove's Listed Hedge Funds Dispatch

Expanding further upon 'document dissemination' day here at Market Folly, we'll turn next to JPMorgan & Cazenove's listed hedge funds dispatch report. Earlier today we've already posted up Credit Suisse's monthly hedge fund report as well as QB Asset Management's shadow price of gold report. The below document was produced by JPMorgan Cazenove in London and hasn't been produced in the United States, so this particular piece might be of more relevance to our UK based readers.

An interesting takeaway from their research is that in 2009, out of all the publicly listed hedge funds in the UK, Dan Loeb's Third Point was the best performing fund. For 2009, Third Point's listed product was up 41% compared to a gain of 20% for the HFRI Fund Weighted Composite.

We've of course covered Third Point's portfolio in-depth and just recently posted up one of their recent portfolio maneuvers. (Additionally, we've also posted up Third Point's commentary for those interested as well). Other solid performers in 2009 included Cayenne as well as Boussard & Gavaudan. Cazenove's research is an intriguing look at the listed hedge fund space with some comprehensive data.

Embedded below is the full report:



You can directly download the .pdf here.

Overall, Cazenove concluded that there are plenty of quality names in the listed hedge fund space and that these solid names will be "the bedrock for the sector's survival and growth." Be sure to check out all the rest of the hedge fund research we've been posting up recently.