The Kobeissi Letter flags a striking positioning shift: hedge funds have sold US information-technology stocks in six of the last eight weeks, and the eight-week total is the largest in at least ten years. Last week tech was the single most-sold US sector among these funds. As a result, tech now makes up its smallest share of hedge funds' total market exposure since February, and at the current pace that share could drop to a five-year low as soon as next week. Read simply, the fast money is stepping to the sidelines on the trade that has led the market for years. What it does not tell you is direction. Heavy selling by hedge funds can mean smart money sees the AI-and-tech run cooling, or it can be the kind of washed-out positioning that sets up a snap-back when everyone has already sold. Positioning data describes who is holding, not what happens next. Still, it matters because tech is such a large slice of the index that when its most active traders retreat this hard, it removes a buyer that has repeatedly stepped in on dips, and it raises the stakes on the coming megacap earnings to justify valuations without that support.
Why it matters · The most active traders are exiting the trade that has led the market, removing a reliable dip-buyer just as megacap earnings must justify rich valuations.
Worth asking · Record hedge-fund selling of tech: a smart-money warning that the leaders are topping, or washed-out positioning that sets up the next rally?