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The Stock to Watch Now

At a charity event last night aboard the Intrepid on the Hudson River, several hundred hedge fund traders sipped white wine while waiting for the Roots to play. The weather was magnificent, but get past the pleasantries and none of them were in a particularly good mood.

That's because June has been a horror show for hedge funds. Most of them entered June up for the year; they all now appear to be flat to down. The reason: they were almost all net long.

Not any more. They have been carpet-bombing the markets with short positions in the past two weeks — that's what they're trained to do.

In between the scotch and sauvignon blanc, several trends emerged in the commentary:

1) Many (not all) felt that equities were still the best long-term bet ("the best house in any neighborhood," as Leon Cooperman is fond of saying), and are still cheap relative to interest rates. Many were looking for rallies in the second half of the year, which would not be surprising given the short base that is building up.

2) Treasurys, despite the rally, are not viewed as a safe investment and in fact were laughed at as way too risky by most.

3) The economy is a real problem, as some of the big drivers--housing and autos — are not in a significant ramp-up.

4) There will be some kind of stimulus coming: most commonly mentioned was another payroll tax cut, and a tax cut for repatriation of corporate profits from overseas with the requirement that the money be used to create jobs.

Bleeding into the close...that's the way it looks today. Volume is remarkably light for a quadruple witching day, indicating that this rally is not well attended. But the witching makes a close that's hard to call.

Traders are skeptical about any Greek "deal" between Germany and France, simply because...they're not Greece. At the end of the day nothing changes until the Greek people accept austerity...which most traders believe will be a very difficult sell.

The stock to watch is Apple), which is down another 1 percent today to the lowest level of the year; it seems it is being used as a source of funds.

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