More to come on the DOWNSIDE?....

Smart Money Betting More Downside To Come
Published: Friday, 7 May 2010 | 5:41 PM ET Text Size By: Lee Brodie
Producer

Chatter suggests some hedge funds may have seen this plunge coming and got short last week. So what are they doing now?

Before we get to that, we first wanted to make sure there was substance behind the chatter.

And analysis from LocateStock.com seems to confirm that there is, in fact, a great deal of substance.

LocateStock.com is a company that finds stocks in the marketplace that hedge funds and high frequency traders are looking to short.

And CEO John Tabacco tells us last Thursday the number of requests to locate stocks to short jumped 50% above the normal 60-day average; with top requests listed below:

Most Requested Stocks To Short Last Week
Ambac
Citigroup
Bank of America
MBIA
Frontier Financial
Source: John Tabacco, Locatestock

So what's the smart money doing now?

With the market turning negative for the year on Friday, you'd think the smart money would be covering. But they're not.

”Now, they’re doubling down and shorting more,” says Tabacco, “with financials the most shorted again.”

You read that right. Despite the sharp declines this week the smart money is getting shorter.

”Our analytics suggests there’s a big event out there and there could be more downside,” says Tabacco.

What's the bottom line?

Next week could be a rough one. Better be on your toes !