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COT Weekly Data Discloses Biggest Euro Short Covering Episode In History

Tyler Durden's picture





 

The CFTC Commitment of Traders is out and, it's a doozy: the amount of short covering in net spec EUR short positions hits what is certainly an all time record, as just under 50 thousand (49,585) short contracts are covered. This represents a huge 44% of all outstanding EUR net shorts (-111,945) as of the prior week. No wonder the EUR surged, and no wonder Goldman downgraded the EURUSD - in tried and true fashion we wonder how many banks tightened up margin requirements only to force the biggest short squeeze in history. It is only logical that every sellside desk would try to sucker as many clients as they could in advance of this rampage. The current net spec short position takes total shorts back to levels from mid-April, when the euro was trading in the 1.30 range. This is very bad news for existing EUR longs as it is now guaranteed that all weak hands have certainly been shaken out. Any additional move higher will actually have to occur for truly fundamental reasons. Alas, those will not be coming any time soon.

 


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Fri, 06/18/2010 - 16:36 | Link to Comment Joe Sixpack
Joe Sixpack's picture

The short squeeze gave Europeans one last chance to buy cheap gold and silver!

www.Gold-Silver.US

Fri, 06/18/2010 - 18:04 | Link to Comment unky
unky's picture

i had some € left and used this chance ^^

Now 95% of my money is into precious metals... Lets see the upcoming weeks.

Fri, 06/18/2010 - 16:40 | Link to Comment truont
truont's picture

"and no wonder Goldman downgraded the EURUSD"

Gads, Goldman retail recommendations are the best contra-indicators ever.

Better than CNBC's Mad Money!

I don't know what I'm going to do when Goldman tells its clients to buy gold...

Fri, 06/18/2010 - 16:53 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

That will be the first tick after midnight...won't matter, it'll all be over.

With rocks raining down from the sky, Lloyd Blancheck stares emphatically into the camera.  "We are now recommending..." he gets hit in his bald head with said rock.  "OUCH!  We are now recommending everyone buy gold."  He tries to cover his mic; as he turns to his side, he asks someone "Is the price going down yet?"  Off camera the man replies, "No, it is still moving upward in a parabolic fashion."  "BUY GOLD NOW!"  He screams!  He looks again, "Now?"  The man shakes his head no.  "Fuck!" says Lord Blankcheck, "Well, time to get my stash and head for Dubai."

Fri, 06/18/2010 - 17:18 | Link to Comment Dr. No
Dr. No's picture

I am sure he already has a draft version of the "Plan for busting Bunker Hunt", updated for 2010 and gold market.

Fri, 06/18/2010 - 17:36 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

gawd these men and their plans.

Fri, 06/18/2010 - 17:16 | Link to Comment Mactheknife
Mactheknife's picture

>I don't know what I'm going to do when Goldman tells its clients to buy gold...

When that day comes, you can rest assured that the squid will have plenty to sell. Unfortunately, it will cost you your firstborn son.

 

 

 

 

Fri, 06/18/2010 - 19:27 | Link to Comment Borat
Borat's picture

So should short everything Goldman says buy and long what Jim Rogers say buy? He was the only crazy saying he was buying EUR this week. Even though he mention it could be just a reflex since he is bearish on the long term.

Fri, 06/18/2010 - 20:43 | Link to Comment SAJ
SAJ's picture

One quite reasonable thing to do is to eschew **either** net short or net long possies in EUR/USD.

It is both eminently reasonable, in order to take advantage of Euro's elevated vol, and has been eminently practical for the last few months, to maintain a hedged position.  Specifically, short some amount of Euro and simultaneously short some number of front-month puts, keeping delta  slightly negative until expiration week for the oppies, and then, during that week, overwriting the next month's puts slightly and accepting a bit of a gamma risk.

As long as Euro oppies' IVs are where they are, or higher, and until some dollar-collapse event appears on the horizon (which it will, it will, in due time), this strategy appears to my admittedly limited mind to be a steady profit-generator.

And has been working well in hard-dollar real world terms since the March expiration.

GT to all...

 

 

 

Fri, 06/18/2010 - 16:44 | Link to Comment Mongo
Mongo's picture

Holy fuck

 

Jean-Claude Trichet can pack his bags!

Fri, 06/18/2010 - 16:50 | Link to Comment Horatio Beanblower
Horatio Beanblower's picture


"The euro's inevitable failure will be horrendous for all of us...The single currency is a disaster, but the cost of its life support will devastate Europe's economies, says Charles Moore - http://www.telegraph.co.uk/comment/columnists/charlesmoore/7839188/The-euros-inevitable-failure-will-be-horrendous-for-all-of-us.html

 

Charles Moore is the Editor of the Daily Telegraph.

 

The Euro - http://www.youtube.com/watch?v=lDI4LO6l6FM

Fri, 06/18/2010 - 16:51 | Link to Comment Übermensch
Übermensch's picture

Any additional move higher will actually have to occur for truly fundamental reasons.

Since when did fundamentals start mattering?! 

Fri, 06/18/2010 - 17:02 | Link to Comment MaximumPig
MaximumPig's picture

I think he meant new-market fundamentals, like how fast SNB and PBC can hoover up euros, not old-market fundamentals, like exports, current account balances and interest rate and yield environments.

Fri, 06/18/2010 - 16:58 | Link to Comment lettuce
lettuce's picture

goldman had said they expected a bounce from the lows to the 1.218-1.22 range where they would add to their positions against the cross... at least they were consistent this time!

Fri, 06/18/2010 - 18:58 | Link to Comment geminiRX
geminiRX's picture

ha! I love your name and avatar (for some unknown reason)

Fri, 06/18/2010 - 17:31 | Link to Comment A_MacLaren
A_MacLaren's picture

And as the financial terrorists, err short sellers, err realists, yeah that's the ticket, have failed (temporarily) in taking out, or at least to parity the Euro, it might be time to move to a new target.

Like maybe the Pound?

http://www.webofdebt.com/articles/deficit_terrorists.php

 

Sat, 06/19/2010 - 03:44 | Link to Comment PhattyBuoy
PhattyBuoy's picture

... in a paper "fiatsco" race to the bottom, the Sterling offers no safe haven.

Fri, 06/18/2010 - 17:32 | Link to Comment BlackBeard
BlackBeard's picture

I covered because the fucking thing stopped going down.

Fri, 06/18/2010 - 17:47 | Link to Comment Sir Vivore de A...
Sir Vivore de Apocolypse's picture

And this just goes to show that you should continue to do the reverse of whatever the squid says.

Fri, 06/18/2010 - 18:29 | Link to Comment cowdiddly
cowdiddly's picture

+1

Fri, 06/18/2010 - 18:10 | Link to Comment LeBalance
LeBalance's picture

umm...Am I right in thinking that is The Nail in the Euro?

Fri, 06/18/2010 - 19:03 | Link to Comment mikla
mikla's picture

umm...Am I right in thinking that is The Nail in the Euro?

Um, I dunno.  Hard to tell how many acts are left, because of the twists-and-turns.  (The ECB can print too?  Really?  ;-)  Still, this is a big one, and it could really be "the big swing".

However, yes, I expect the Euro to go to zero inside twenty-four months.  I'd actually be really impressed if they made it twelve months, but that's probably about right.

And, go back and check those contracts graphs out again!  Don't they look like this?  Life is gonna get exciting on the next turn (DOWN):

Fri, 06/18/2010 - 21:05 | Link to Comment Hephasteus
Hephasteus's picture

2 years seems logical and reasonable. Which is probably why it won't happen.

Time to ride the crazy chair.

Sat, 06/19/2010 - 12:24 | Link to Comment Mark Beck
Mark Beck's picture

The graph represents a form of positive feedback :)

Mark Beck

Fri, 06/18/2010 - 18:36 | Link to Comment thesapein
thesapein's picture

Seems like everyone wants the Euro to go down.

So I'm expecting it's the Dollar's turn to slide.

 

Fri, 06/18/2010 - 19:10 | Link to Comment Sudden Debt
Sudden Debt's picture

Now Timmy is in charge, all will become back to normal for the US and the EU.

The only problem is... does anybody remember how normal looks like again? It's been a while :)

Fri, 06/18/2010 - 19:24 | Link to Comment wafflehead
wafflehead's picture

where is the long cover for gold snitches?? thats right...there is none.

Fri, 06/18/2010 - 19:25 | Link to Comment Florida Joe
Florida Joe's picture

And as usual, heard on CNBC:

Gold takes the stairs up, and the elevator down. So protect yourself with stop loss.

 

So the sheeple make it a self-fulfilling prophesy, and the bog boyz strip them of their holdings, almost like clockwork.

 

(It's called accumulation. That's how big boyz buy.) So have your buys ready and waiting.)

Fri, 06/18/2010 - 19:37 | Link to Comment Borat
Borat's picture

Liked Cnbc headline on todays close "market up for the week as gold soars". Didn't know they hired HFT that generated algos to create these headlines. The algo function is = RAND(gold, market).

Fri, 06/18/2010 - 19:28 | Link to Comment Catalonian Capi...
Catalonian Capitalist's picture

I think I will move to Andorra, and join there campaign to never get involved with the rest of the world. (Last time they participated in a world event, was in the 8th century when Charlemagne stopped Emir al-Hakam from bringing his Moorish empire into the rest of Europe)

AGO Sep. Puts anyone? :P

Fri, 06/18/2010 - 20:47 | Link to Comment sterlinger
sterlinger's picture

It may look like a V but in reality the misery ride to the downside just got deeper,faster,harder

Fri, 06/18/2010 - 21:59 | Link to Comment stickyfingers
stickyfingers's picture

I still have Irish Punts, Italian Lira and a few French Francs. Does that make me an optimist or pessimist?

Mon, 06/21/2010 - 06:43 | Link to Comment sureseam
sureseam's picture

>I still have Irish Punts, Italian Lira and a few French Francs. Does that make me an optimist or pessimist?

An antique?

Sat, 06/19/2010 - 08:53 | Link to Comment dcb
dcb's picture

this was one oif the easiest trades ever. I got stopped out of my uup, and bought udn. I have a buy stops on uup and stop losses in place on both again.

Please note the same set up look a lot like tlt. perhaps a pop up, then back down. You never know it it loos to being forced higher than it really wants to go. same with the euro. I find that last part of the descending/ascending traingle often looks the same.

treasuries are going up despite technical indicators saything they should be going down. Usually a sign of some turn around soon. that is what happened with the dollar.

Sat, 06/19/2010 - 10:35 | Link to Comment Grand Supercycle
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