Given a fixed time period,say 3 days, the stock/market can go up,down or stay sideways. A hedge fund can long, short or use rangebound(options strategy) to bet for that 3 days closing level.
Hedge fund manager A opened long position the stock/market on monday. On tuesday, there is some major news/economic data/earnings call that can be interpreted either way so the stock/market will breakout of the trading range to move in one unknown direction(3rd door is out).
Hedge fund manager B comes along immediately after the news. Should he (1) randomly pick one direction? (2) instead of analysing market direction, find out fund manager A's position and bet the opposite?