It's no secret the retail trader is sitting this rally out. The massive inflows into bond funds and outflows from U.S. equity funds are well documented. From a longer-term perspective, this sideline money could represent future buying power. But, in the long term, we are all dead ... so what's going to move this market now? Two words -- hedge funds.

In this edition of TraderTV, Ryan Detrick and I discuss how hedge funds have underperformed this market, are underexposed, and could be the fuel to keep this rally going. Let's take a look at what we covered:

• Puts on exchange-traded funds (ETFs) are popular hedges for the hedge fund crowd. Our quantified data is showing that the measure of puts relative to calls on ETFs is at a very low level. This tells us hedge funds haven't been heavily exposed to this 2012 rally.


• Although this hedging activity is low, we are encouraged by the fact that we've seen an uptick in hedging activity during the past several weeks. This tells us perhaps hedge funds are in accumulation mode, which could be a positive for the market.


• Bank of America/Merrill Lynch just came out with a study, claiming that hedge funds are currently 19% exposed to equities. Back in May, this figure stood at 35%. Well, since May, the market has had a very nice rally and this reduction in exposure simply shows they missed it.


• With hedge funds trying to play "catch up," any and all pullbacks could be short and sweet.

Bottom line: hedge funds have been underexposed and that could be bullish for this market.

Oh, and one last thing. In this week's video, we debut a new "Top Tweets of the Week" segment. If you want to see what Bill Gross and Chuck Norris have in common, I wouldn't miss it.