This page has been archived and commenting is disabled.
Brutal Short Covering Massacre Sends Market Soaring Just In Time For NYSE Shorts To Hit 2011 Highs
With market volume below abysmal levels, and with market breadth at the highest in what appears ever, many are wondering how it is possible that the S&P could move by about 70 points in one week. Simple. As the chart below shows, NYSE short interest for the week ended June 15 was the highest in 2011, at 13.5 billion shares, a jump of 333 million share in two weeks, which certainly persisted into the second half of the month, just in time for the market to realize that with QE2 ending, and nobody left to buy bonds, rates have nowhere to go but up. The net result is one of the most epic short squeezes in recent history, coupled with one of the most rapid moves out of bonds and into equities, and if judging by the 5 Year bond, the most rapid ever. What the message from all of this is, aside from the fact that higher interest rates are supposed to somehow be better for the economy, is that the entire market now has adopted a HFT modus operandi, where nobody even bothers to discount, and all the action is reactive. We are not sure about readers, but the fact that the market has lost its most fundamental feature - discounting - is just a little troublesome, if not surprising. Such is life under centrally planned capital markets.
»
- 16091 reads
- Printer-friendly version
- Send to friend
- advertisements -
When I look at the charts and see straight lines up or down at the opening bell I understand from market experience 20 years ago that this is more like market maker collusion than anything else---from experience 20 years ago.
price gouging and pulling bids, of course may force a short squeeze or a market 'collapse', but years ago everyone on the street would have been screaming. Computers and especially HFT have nothing to do with human trading of these same markets; in fact, these markets are not even the least bit interesting and do not reflect a thing about the real world.
I do not trade these markets; I take delivery of the coins or shares as a long term position. Maybe, I will lose but I am still living in the world of human markets. Otherwise trading is not enjoyable-----short squeeze or collusion? I don't know----maybe both.
"I love your drapes, but do they match the carpet?"
of course not---that's why I'm having fun
To bad we all focus on the shorts and left in the dark by this rally.
Another missed opportunity. It really sucks.
Since DOW/SP500 is now EXTREMELY overbought, the reaction next week should result in a significant retracement.
S&P500 daily charts show updated rising wedge and possible head and shoulders pattern with target of 1,150 when confirmed.
http://stockmarket618.wordpress.com
This week just doesn't make sense. This looks like a good time to sell some naked shorts on some bear ETF's. I am hoping wall street is going to use that volatility they just created to ride it the other way.
They need a downdraft in order to justify QE3. All the better to start a little higher before they use Ft. Calhoun, Los Alamos, Montana Oil Spill, et cetera as a "confidence shaker" that gives them a 10-15% pullback.