Thursday's sharp sell-off in U.S. stocks was sparked by nothing more than too many traders betting on energy, equity and metals markets going higher that then popped in a cascade of stop-loss selling, a hedge fund manager said.

A proprietary index that NuWave Investment Management LLC uses to gauge risk about 10 days ago posted its highest reading ever -- greater even than fall of 2008, said Troy Buckner, managing principal and co-founder at the Morristown, New Jersey-based hedge fund.

NuWave pared its exposure to only 40 percent of normal levels, mildly counter to the risk trade in general, he said.

We were expecting a significant correction to most of the markets, Buckner said. While we wouldn't claim to know the day, we recognize that periods like this generate our worst-risk profiles historically.

A wave of selling on Thursday knocked U.S. stocks down as much as 9 percent, pushed the euro to an almost 14 month-low and gold prices climbed to close to record highs.

NuWave gave a presentation about tail risk at Morgan Stanley in late April to an audience of about 120 investors. The presentation outlined the hedge fund's concerns that markets were leaning too heavily in one direction.

Buckner said while traders and others will point to any number of triggers or catalysts, such as Greece's debt woes or a fat thumb, as causing Thursday's rout, which included the Dow's biggest intraday point drop ever, he disagreed.

I'll be surprised if that's the case. There's heavy pressure and uniformly excess positioning on the speculative side across multiple sectors, including equities as probably the worst, said Buckner, who also cited metals and energy.

After hitting lows produced by the worst financial crisis in 70 years, stocks jumped about 80 percent, copper prices nearly tripled and crude oil rose 250 percent driven by direction bets placed by speculators, Buckner said.

Multiple sectors were exposed to these excesses, he said. By our measurement these are greater speculative imbalances than even the fall of 2008.

NuWave has a special perspective on the market as it holds long-short and market-neutral positions, and as a commodity trading advisor, operates managed futures, Buckner said.

From our perspective I think it's not surprising to us that there are massive corrections in store, and from today's action we didn't sense there was anything other than a cascade of speculative positions triggering stop losses.

(Reporting by Herbert Lash)