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With NYSE Short Interest At The Lowest Level In Years Following A Record Short Collapse... Who Will Be The Bid?

Tyler Durden's picture


One of the cute side-effects of the Fed's third mandate has been the successful elimination of all market shorts. A quick update of the NYSE short interest indicates not only the deplorable presence of shorts in the market (those entities who provide a natural bid when the market is plunging), but that the bulk of the market meltup over the past several months has been due exclusively to shorts covering existing positions. Well, with short interest now at a multi-year low of 12.4 billion shares (lowest since 2007), compared to 14.5 billion just after the Flash Crash, a 13.6 billion average over the period, and the lowest amount since the Lehman failure, our only question is when the market plunges, like it is doing today, who will be the natural short covering bid when stocks are in freefall?


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Tue, 02/22/2011 - 14:37 | 985968 trav7777
trav7777's picture

The Fed will

Tue, 02/22/2011 - 14:40 | 985980 Mr. Anonymous
Mr. Anonymous's picture

+1. Thank you for pointing out the obvious to Tyler.

Tue, 02/22/2011 - 14:43 | 985997 HelluvaEngineer
HelluvaEngineer's picture

I hope they buy the whole damn stinking pile.

Tue, 02/22/2011 - 14:54 | 986034 Mr. Anonymous
Mr. Anonymous's picture

Indeed.  But so far, it would appear someone has not read The Beard's 'No Bad Days' memo.

Tue, 02/22/2011 - 14:59 | 986049 66Sexy
66Sexy's picture

lol check out CNBC hiding the commodities prices

Tue, 02/22/2011 - 15:14 | 986083 HelluvaEngineer
HelluvaEngineer's picture

I liked it better this morning when they decided the best thing to talk about was sports.

Tue, 02/22/2011 - 15:20 | 986093 Cash_is_Trash
Cash_is_Trash's picture

Zee new jerman manajment.

All your crap are belong to us.


Wed, 02/23/2011 - 05:18 | 987894 zhandax
zhandax's picture

Well, more specifically, the Sackster's little greased ES monkeys.  Just add arbitrage and serve....

Tue, 02/22/2011 - 15:15 | 986084 jus_lite_reading
jus_lite_reading's picture


Tue, 02/22/2011 - 16:20 | 986237 bankrupt JPM bu...
bankrupt JPM buy silver's picture

I on the bid for NFLX at $50 ;)

Tue, 02/22/2011 - 14:59 | 986048 treemagnet
treemagnet's picture

Problem is, not even Ben can take on the market in a large breadth decline.  It'll be like a dam breaking - the dam that used to be able to keep it all together.  Do the math if you don't believe me, its just not possible.  But I agree they'll die tryin'....

Tue, 02/22/2011 - 15:05 | 986064 Confucious 222
Confucious 222's picture

Bennie and the Inkjets must be running on fumes today - Oh POMO me not, on the lone prair-ie

Tue, 02/22/2011 - 15:48 | 986154 NotApplicable
NotApplicable's picture

Problem is, not even Ben can take on the market in a large breadth decline.


Which is why they try to "manage expectations" to keep the job as small as possible on a daily basis. Their only goal is to avoid the stampede for as long as they can, so that they might steal yet another day, with the hope that they can eventually placate the herd, avoiding a stampede altogether.

I'd like to say that this is an impossibility, but after a century of government schooling, the herd may have enough inertia to resist saving itself, instead strengthening its resolve to remain in danger.

Tue, 02/22/2011 - 16:25 | 986246 KickIce
KickIce's picture

Much like a simple wooden fense is successful of keeping in a herd of cattle.

Tue, 02/22/2011 - 18:49 | 986702 unununium
unununium's picture

Much like the mere threat of a FNM/FRE bailout was enough to keep them alive.


Oh wait...

Tue, 02/22/2011 - 17:28 | 986455 Saxxon
Saxxon's picture

Said another way, the market appears to have been geared to discourage shorts and encourage retail.  The problem is, whatever retail money is still willing, is in; while the shorts have covered massively.  This dynamic can be blamed on the POTUS who showed his hand; and his minions (remember, "stocks are cheap" in March 2009?)

In other words, corruption at the highest level.  Where does that leave an empire?

Tue, 02/22/2011 - 16:13 | 986217 spinone
spinone's picture

What makes you think that if the dam breaks, they'll print the real prices?

Tue, 02/22/2011 - 15:13 | 986059 Pure Evil
Pure Evil's picture

It's Bennie and the Jets.

Tue, 02/22/2011 - 14:45 | 986007 unwashedmass
unwashedmass's picture


um...Bennie Boy. that's who's going to hold the steaming pile of crap instead of retail who have declined the honor of giving the major banks what remains of their savings.

of course, Bennie Boy is going to offload this on the taxpayers (you don't think handlers are going to take the loss? how naive)...

so, the taxpayers. that's who.

Tue, 02/22/2011 - 15:05 | 986066 plocequ1
plocequ1's picture

Oh the horror, the horror.

Tue, 02/22/2011 - 14:49 | 986022 Sancho Ponzi
Sancho Ponzi's picture

It looks like Bennie and the PPT are dumping dollars, but this time it's not working. 

Tue, 02/22/2011 - 15:02 | 986057 Rogerwilco
Rogerwilco's picture


Buying is not part of the Fed's exit strategy.

Tue, 02/22/2011 - 15:31 | 986117 tomfool
tomfool's picture

Correct, so BTFD

Tue, 02/22/2011 - 15:36 | 986127 buzzsaw99
buzzsaw99's picture


Tue, 02/22/2011 - 14:37 | 985973 LawsofPhysics
LawsofPhysics's picture

Wait what, I was short this morning, seemed like a quick no-brainer.  Tomorrow is another day.

Tue, 02/22/2011 - 14:38 | 985977 Cleanclog
Cleanclog's picture

OT - Mubarak  suffering and debilitated by pancreatic cancer.  No coma.  Not yet.

Tue, 02/22/2011 - 14:44 | 986004 pragmatic hobo
pragmatic hobo's picture

I will believe it when he is dead.

Wed, 02/23/2011 - 02:41 | 987784 StychoKiller
StychoKiller's picture

My 6-day bout with pancreatitis (later, the removal of my gall bladder), tells me that it won't be a pleasant death!

Tue, 02/22/2011 - 14:38 | 985979 shushup
shushup's picture

I thought that the 8 billion a day in fed/PD money was also biding up the market.

Tue, 02/22/2011 - 14:40 | 985984 Seasmoke
Seasmoke's picture

this is a much bigger side effect than most realize

Tue, 02/22/2011 - 15:11 | 985989 buzzsaw99
buzzsaw99's picture

who will be the natural short covering bid when stocks are in freefall?


Don't play dumb. You know very well from whom (and where) the bid will come.

Tue, 02/22/2011 - 14:42 | 985992 Lucius Corneliu...
Lucius Cornelius Sulla's picture

Could momo be reversing?  

Tue, 02/22/2011 - 14:45 | 986003 Judge Judy Scheinlok
Judge Judy Scheinlok's picture

Fat chance. Buy the dip dummies!

Tue, 02/22/2011 - 14:43 | 985993 HelluvaEngineer
HelluvaEngineer's picture

And the follow-up question: who f*cking cares?

Tue, 02/22/2011 - 16:58 | 986352 MachoMan
MachoMan's picture

The sleepwalkers...  they only rise from their slumbers when their 401k balances decrease significantly...

Tue, 02/22/2011 - 14:42 | 985995 Lord Peter Pipsqueak
Lord Peter Pipsqueak's picture

Q"who will be the natural short covering bid when stocks are in freefall?"

A. The same buyer on the way up - Benny and Brian.

Tue, 02/22/2011 - 14:43 | 985998 kentfinance
kentfinance's picture

Benny B

Tue, 02/22/2011 - 14:44 | 986001 Oh regional Indian
Oh regional Indian's picture

How about looking at company buy-backs and fund holdings for hints.

Lot's of free money available through various SHAFT and other relief progroms.


Tue, 02/22/2011 - 14:47 | 986018 homersimpson
homersimpson's picture

This link has little to do with what zerohedge covers.. save your bandwidth and ditch the link.

Tue, 02/22/2011 - 14:53 | 986033 Oh regional Indian
Oh regional Indian's picture

Homer, I've been doing that for 40 weeks straight. I'm sure most people have figured out whether they like it or not with one visit. 

Relevance is contextual.


Tue, 02/22/2011 - 15:25 | 986106 breezer1
breezer1's picture

'contextual', tried it once at one of those adult clubs in montreal. it was alright.

Tue, 02/22/2011 - 15:05 | 986069 Oh regional Indian
Oh regional Indian's picture

Not so fast Junkers. Here are some the math..

sure you can find many more.

Many Dow stocks in there.

Makes sense doesn't it? free money to buy your own crap back onto your books.

Payback. Can't you see it?


Tue, 02/22/2011 - 14:44 | 986002 ghostfaceinvestah
ghostfaceinvestah's picture

Sure as fuck won't be Whitney Tilson buying back the NFLX shares he shorted, since he covered at the top.

Tue, 02/22/2011 - 18:52 | 986711 unununium
unununium's picture


Tue, 02/22/2011 - 14:45 | 986005 Bansters-in-my-...
Bansters-in-my- feces's picture

Guess one,must be the same as two and three.

Tue, 02/22/2011 - 14:46 | 986012 PAPA ROACH
PAPA ROACH's picture

Let's see, ummmmm The FED?

Do or die trying, pump up all equity holdings as the massive boomers need plump 401K's and IRA's to meet needs, in fact if the accounts get high enough, maybe these guys will start retirement sooner to free up their legacy jobs thus creating employee demand.

So I can make more I can buy more I can work I can make more money.........

Bernanke=Pablo Escobar!!

Tue, 02/22/2011 - 14:58 | 986045 Milestones
Milestones's picture

HaHaHaHaHa!! Good ole Pablo> Love it.   Milestones

Tue, 02/22/2011 - 14:46 | 986015 99er
99er's picture


Prices falling out of a Rising Wedge.

Tue, 02/22/2011 - 14:48 | 986020 Captain Kink
Captain Kink's picture

Let's not discount the HFT robots, they will be bid and ask, as usual.

Tue, 02/22/2011 - 14:57 | 986023 ThirdCoastSurfer
ThirdCoastSurfer's picture

Longs make money, shorts make money, Piigs (& dics) get slaughtered. 

Can't we all just get along without everyone going long?  

The real danger of shorts is JPM's ability to pile on with unlimited funds and force a market down so they can turn around and buy and keep the streak of days without a trading loss alive. 

Tue, 02/22/2011 - 16:53 | 986335 Reptil
Reptil's picture

Sort of what happened in may 2010?

Tue, 02/22/2011 - 14:50 | 986024 raya123
raya123's picture

If it's Ben, then why isn't he buying now?  The Fed doesn't buy stocks, they buy bonds and then some of the money they spend on the bonds finds its way into the stock market... but if there are reasons not to buy stocks, then the recipients of the free money will abstain from buying.

Tue, 02/22/2011 - 14:56 | 986036 walküre
walküre's picture

in order of the most recent developments..

the Fed is announcing one last major massive fucking POMO MOMO HOMO BIG BANG DA HOE event and GOES ALL IN!!

Tue, 02/22/2011 - 14:51 | 986026 tecno242
tecno242's picture

Hopefully David Tepper and John Paulson BTFD right into bankruptcy.

Tue, 02/22/2011 - 14:54 | 986029 walküre
walküre's picture

long commodities, short equities (especially emerg. markets) might be the play of this year.

BTFD is loosing steam

you can't eat gold is sooo 2010

"YOU CAN'T EAT OIL! is now!

Tue, 02/22/2011 - 16:00 | 986180 Commander Cody
Commander Cody's picture

You can eat gold and drink oil.  It is physically possible to do so given reasonable portions.  Whether it is good for you is another question.

Tue, 02/22/2011 - 14:57 | 986043 topcallingtroll
topcallingtroll's picture

Time to short the mother. I am voting for a top.after I voted against it after I voted for it.

Tue, 02/22/2011 - 14:57 | 986044 firstdivision
firstdivision's picture

Wow, we are seriously bouncing on the support here.  If this breaks it's down to ~1295 from here.

Tue, 02/22/2011 - 14:59 | 986051 GOSPLAN HERO
GOSPLAN HERO's picture

Comrade Obama says BTFD.

Tue, 02/22/2011 - 15:03 | 986052 redarrow
redarrow's picture

Will the PTB again blame some firm for a fat finger sell orders today? OR will Wadell & Reed be blamed (again) for todays sell off?

Tue, 02/22/2011 - 15:01 | 986055 Waterfallsparkles
Waterfallsparkles's picture

I was thinking the same thing.  Who will catch a falling knife, except a short. 

Oh, I forgot we have Bennie Bucks.  He will eat any losses.

Bennie is like the sin eater, in earlier times.  He comes in and eats all of the sins of the Dead.

Tue, 02/22/2011 - 15:03 | 986060 dukeystick
dukeystick's picture

THAT is a very interesting chart.  I'm reminded of the old commercials for one of those butter substitutes...

It's not nice to fool Mother Nature!

Tue, 02/22/2011 - 15:06 | 986068 Yen Cross
Yen Cross's picture

Hu and his (pboc) soverign wealth fund.

Tue, 02/22/2011 - 15:11 | 986080 Yancey Ward
Yancey Ward's picture

Ah, the Fed can buy and sell to itself.  Problem solved.  The real issue today is that someone called in sick at the Fed for a 4 day weekend.  He will be disciplined tomorrow when he returns.

Tue, 02/22/2011 - 15:12 | 986081 tmosley
tmosley's picture

What fool is short ANYTHING in this market?  Christ, I though the shorts would have learned their lesson quicker than this.  I learned mine at the start of QE1.  Pulled completely out of the market on both sides at that point, as the writing was on the wall.

Tue, 02/22/2011 - 15:30 | 986116 topcallingtroll
topcallingtroll's picture

Short capitulation, bitchez. Look at the chart

Tue, 02/22/2011 - 15:37 | 986130 Implicit simplicit
Implicit simplicit's picture

I guess I'm a fool then, but I don't care what people think. I have been long short for 4-7 months, and never covered a thing. I don't plan on covering until at least the fall of 2012. Sold small small caps that had been my only longs last week. 

Tue, 02/22/2011 - 15:49 | 986161 tmosley
tmosley's picture

Not saying you should be long either.  What I am saying is that being short in this market is like being short in the Zimbabwe market.  You are shorting in terms of a collapsing currency.  If you can manage to short in terms of gold, then you are on a path to making some nice returns.

Tue, 02/22/2011 - 17:12 | 986392 Implicit simplicit
Implicit simplicit's picture

I have owned gold and silver and plan to again. However, I'm betting there will be a better opportunity to buy it when the markets sell off big, and they spx is below 666.

Tue, 02/22/2011 - 17:43 | 986508 tmosley
tmosley's picture

Well, at least you are gambling with your own life.

Deflationary theory is going to end in tears.

Tue, 02/22/2011 - 18:15 | 986607 Implicit simplicit
Implicit simplicit's picture

I only believe that no one is right in this debate and everyone is right. The only thing seperating the def. and infl. is time. Both will be right at different times within the next 3 years.

Tue, 02/22/2011 - 19:45 | 986864 sellstop
sellstop's picture

You short things that are weak. And you time your shorts.

Average in. Only sell continued weakness. Don't get overextended. Do not be proud. You may be wrong once. You may be wrong twice. You may be wrong three times. Keep your losses on each bet small. Eventually you will catch a big move with a big position on and you will pay for all the false moves and more.

The important point is: Do not be proud!!!!!



Tue, 02/22/2011 - 15:18 | 986092 slackrabbit
slackrabbit's picture

I like many others would love to short, but after shorting was blocked in 2008 for 3-4 weeks to ptotect the banks I only short commodites... cotton at a 200 year high (no real demand increase to justify that price ;-)  


Tue, 02/22/2011 - 15:20 | 986098 Yancey Ward
Yancey Ward's picture

Yep, with people selling the shirts off their backs to eat, why go long cotton?

Tue, 02/22/2011 - 15:18 | 986095 topcallingtroll
topcallingtroll's picture

There are a lot of double and triple short.etfs. check out soxs.

Tue, 02/22/2011 - 15:45 | 986148 the grateful un...
the grateful unemployed's picture

nobody holds those things overnight, and in the final outcome if really large money goes short they can't guarantee them move than 1:1 can they? 

Tue, 02/22/2011 - 19:39 | 986844 sellstop
sellstop's picture

"nobody hold those overnight"?

If nobody held them overnight they would finish each day flat.

They may not exactly track 1:1, but they track. And they are cheap to trade.

Who holds anything that moves against them anyway??


Tue, 02/22/2011 - 15:23 | 986101 entendance
entendance's picture

MEANTIME...President Obama is picking Corporate CEOS...
AOL Co-Founder Steve Case to Join Obama's Panel on Jobs, Competitiveness

Tue, 02/22/2011 - 15:33 | 986120 RobotTrader
RobotTrader's picture


Tue, 02/22/2011 - 15:45 | 986146 lieutenantjohnchard
lieutenantjohnchard's picture

how can it be do or die ye olde catfish mouth? what does the summation index tell us? that's your tour de main crash indicator, isn't it, or at least that's what you said last week. but then again this is a new week so you might have a new indicator since the wind might have shifted east versus the favorable westerly breeze.

btw: gentleman jim sinclair is sitting tall while sipping on a mint julip. the old scroomer, as you effectionately call him, sends his regards.

Tue, 02/22/2011 - 16:17 | 986228 ghostfaceinvestah
ghostfaceinvestah's picture



Tue, 02/22/2011 - 15:37 | 986128 10kby2k
10kby2k's picture

Oh out the national gaurd....the equity market lost 1 week of gains. Its now 1 day away from fresh highs.

Danger= bonds, homes or shorts....whats left---commodities and equities and lotsa pomo. I thought the Fed wanted bond yields to drop, homes to rise, commodities to flatline and equites to rise.  Hmm, 1 outta 4 aint bad.  Like baseball  .250

Tue, 02/22/2011 - 15:42 | 986141 the grateful un...
the grateful unemployed's picture

two answers really, the first is the obvious answer, the PPT and Chm BB, the second answer is why worry, if the market crashes, we blame it on the computers and cancel the trades.

Tue, 02/22/2011 - 15:47 | 986155 sabra1
sabra1's picture

wasn't it naked short selling that was banned? i said naked!

Tue, 02/22/2011 - 15:50 | 986158 I am a Man I am...
I am a Man I am Forty's picture

geez, people have been waiting for this pullback for 6 months, lots of people will buy the dip, but people are looking for a decent pullback, not 2%

news flash, no yield in municipal bonds, corporate bonds, treasuries, etc., and not everyone is going to put all of their wealth in precious metals at all time highs

glad my largest position is xom


Tue, 02/22/2011 - 16:05 | 986196 UninterestedObserver
UninterestedObserver's picture

Yeah smart - you put your wealth in dollar denominated paper

Tue, 02/22/2011 - 16:30 | 986265 I am a Man I am...
I am a Man I am Forty's picture

and have made enough dollar denominated paper with dollar denominated paper to buy a whole bunch of things

Tue, 02/22/2011 - 17:10 | 986390 slackrabbit
slackrabbit's picture

yes, i am running low on toilet paper....(irony defined: a person who buys toilet paper with ...)

Tue, 02/22/2011 - 16:00 | 986181 10kby2k
10kby2k's picture

The mo stocks have backed off lately and the cash is going into the rank and file. Traders just can't ante up for these mo stocks (shades of 2001) and are rationalizing that the rank and file is priced more properly. The mo stocks always lead. At least we are getting a divergence.

Tue, 02/22/2011 - 16:24 | 986241 spinone
spinone's picture

Almost time for the 3:30 buying fairies

Tue, 02/22/2011 - 16:26 | 986251 f16hoser
f16hoser's picture

Who's covering? Shorty or the FEDERAl RESERVE (I.e. US TAX PAYER)? Just wondering. You know, privatized profits and socialized losses.....

Tue, 02/22/2011 - 16:35 | 986284 yipcarl
yipcarl's picture

LOL, I love the 2nd post, as if Tyler didn't know, he's making a point.  Are you really that thick?  Make the math questions harder. 

Tue, 02/22/2011 - 16:43 | 986302 More_sellers_th...
More_sellers_than_buyers's picture


Tue, 02/22/2011 - 19:40 | 986849 QQQBall
QQQBall's picture

Exhaustion gaps on the PM miners?

Tue, 02/22/2011 - 20:06 | 986901 HedgeFundLIVE
HedgeFundLIVE's picture

Bulls, beware!  I don't expect to see a bounce until at least another 10 days:

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