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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Mr. Anonymous's picture

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

HelluvaEngineer's picture

I hope they buy the whole damn stinking pile.

Mr. Anonymous's picture

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

66Sexy's picture

lol check out CNBC hiding the commodities prices

HelluvaEngineer's picture

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

Cash_is_Trash's picture

Zee new jerman manajment.

All your crap are belong to us.

Hündinnenzzzz

zhandax's picture

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

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'....

Confucious 222's picture

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

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.

KickIce's picture

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

unununium's picture

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

 

Oh wait...

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?

spinone's picture

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

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.

plocequ1's picture

Oh the horror, the horror.

Sancho Ponzi's picture

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

Rogerwilco's picture

@trav

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

LawsofPhysics's picture

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

Cleanclog's picture

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

pragmatic hobo's picture

I will believe it when he is dead.

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!

shushup's picture

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

Seasmoke's picture

this is a much bigger side effect than most realize

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.

Lucius Cornelius Sulla's picture

Could momo be reversing?  

HelluvaEngineer's picture

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

MachoMan's picture

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

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.

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.

ORI

http://aadivaahan.wordpress.com/2011/02/21/through-a-lens-darkly/

homersimpson's picture

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

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.

ORI

http://aadivaahan.wordpress.com/2010/06/10/in-dust-realization/

breezer1's picture

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

ghostfaceinvestah's picture

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

Bansters-in-my- feces's picture

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

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 money.........so I can buy more coke............so I can work longer...............so I can make more money.........

Bernanke=Pablo Escobar!!

Milestones's picture

HaHaHaHaHa!! Good ole Pablo> Love it.   Milestones

99er's picture

COMP

Prices falling out of a Rising Wedge.

http://www.zerohedge.com/forum/99er-charts-0

Captain Kink's picture

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

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.