According to a Goldman Sachs report released a few weeks ago hedge funds were overweight commodity stocks, while they were short financial stocks. For weeks on end this trade went against hedge funds. The process became self feeding as the more this trade went bad the more hedge funds needed to get out causing the trade to go even worse. For the first time in a long time energy stocks are up while financial stocks are down. It appears the vicious cycle is over, at least for now.
It is hard to know what the effect of the ending of this trade will mean for the broader market. While one source of instability is gone many others are still around. While I have some positions that will benefit if this trade is over my main goal is to protect my capital. There will be times when there will be easier trades.