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About That Money On The Sidelines: It's "All In"

Tyler Durden's picture


Despite being told again and again by any-and-every commission-taker and newsletter-vendor that sentiment is terrible, managers will need to high-beta performance-chase, and the 'money-on-the-sidelines' is just around the corner; it appears that reality is different. The Net Long Interest in S&P 500 Futures (the most liquid equity trading vehicle in the world) is now at its highest since December 2008. The last time investors were this 'net long', the S&P 500 fell over 25% in the next two months.



Chart: Bloomberg


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Wed, 10/03/2012 - 13:53 | Link to Comment slaughterer
slaughterer's picture

Looks like those longs are fucked.  

Wed, 10/03/2012 - 13:59 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Bernanke is going to try and play "Cap'n Save 'Em" again, but they will be fucked in real terms adjusted via the DXY/PMs/Oil/etc.

Wed, 10/03/2012 - 14:22 | Link to Comment spastic_colon
spastic_colon's picture

yes - the only risk in the equity markets from now until Nov 6 is "event" risk, otherwise the upward channel remains till then.  You can extrapolate the ES level(s) from now until the elections, almost perfect timing for a retest of all time highs, and personally I think it is centrally and administratively planned bullshit.  The shorts will be continually clubbed over the head until then.

Wed, 10/03/2012 - 14:10 | Link to Comment ACP
ACP's picture

Don't they know not to go all-in on a pair of deuces?

Wed, 10/03/2012 - 15:50 | Link to Comment exi1ed0ne
exi1ed0ne's picture

You do when you think the house will hit on a 20.

Wed, 10/03/2012 - 14:26 | Link to Comment Quinvarius
Quinvarius's picture

We got $80 billion in calvary riding in every month, Hoss.  I suggest you find a horse to ride and blend in.

Wed, 10/03/2012 - 19:58 | Link to Comment GernB
GernB's picture

Your response is an excellent example of why all the meda hype about the "most hated rally" and sour sentiment is nonsense. Everyone and thier brother thinks QE3 means they can safely take a long postition and its like free money.

When everyone expects the market to do something, it seldom does. When everyone and thier brother is all in, what happens if thevslightest doubt materializes? Who will buy when everyone is as long as they can be?

Wed, 10/03/2012 - 15:00 | Link to Comment asteroids
asteroids's picture

Not everyone is "all-in". They don't have my money.

Wed, 10/03/2012 - 20:00 | Link to Comment GernB
GernB's picture

Everyone generally only includes only tjose who under some reasonably plausible scenario might buy at these levels.

Wed, 10/03/2012 - 13:54 | Link to Comment DavidC
DavidC's picture

We can only hope...


Wed, 10/03/2012 - 13:58 | Link to Comment Cult_of_Reason
Cult_of_Reason's picture

The market is rolling over.

 Is it secondary to a NFP leak or Spain downgrade to junk leak?

Wed, 10/03/2012 - 14:25 | Link to Comment gjp
gjp's picture

I  see a lot of red on my screen ... except for the usual brigade of AMZN, AAAPL, CRM, QQQ, WFM, HD etc.  As long as there is no limit to overvaluing American consumer and technology stocks I guess the rest of the market can go die in the corner and no-one will care.

Wed, 10/03/2012 - 13:54 | Link to Comment HD
HD's picture

Sometimes an article will put a smile on my face.

This one did.

Wed, 10/03/2012 - 13:54 | Link to Comment LongSoupLine
LongSoupLine's picture

It was "all in" on Kraft for less than a second this morning...oh wait, that was just a "bad market order".  Nothing to see here, move along.

Wed, 10/03/2012 - 13:55 | Link to Comment Jason T
Jason T's picture

except this time, in 2 months, we'll be well into recession Vs last time.  

Wed, 10/03/2012 - 13:55 | Link to Comment kornholio
kornholio's picture


Wed, 10/03/2012 - 13:57 | Link to Comment slaughterer
slaughterer's picture

Kraft rocked today ... as long as your sell order did not get cancelled.  

Wed, 10/03/2012 - 14:00 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

How is day trading working out for ya?

Wed, 10/03/2012 - 14:06 | Link to Comment slaughterer
slaughterer's picture

Had a few good trades mostly from long side.

Luckily none of my longs got "Einhorned"  

(Was predictable he would suggest a short CMG trade as his portfolio has many CMG puts).  

Wed, 10/03/2012 - 14:19 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Keep it up.  Keep it right up.

Wed, 10/03/2012 - 13:58 | Link to Comment Tsar Pointless
Tsar Pointless's picture

"Go ahead, Charlie Brown!", Lucy exclaimed. "I promise, this time, I won't yank the football away from you."

Wed, 10/03/2012 - 17:23 | Link to Comment Bring the Gold
Bring the Gold's picture

So in your analogy is Charlie Brown:
A) a short

B) a long


C) anyone in this nightmare market?

I think the correct answer is C.

Wed, 10/03/2012 - 13:59 | Link to Comment TooBearish
TooBearish's picture

HPQ just downgraded itself by about 2 nothces on earnings warnings - must b company specific...

Wed, 10/03/2012 - 14:04 | Link to Comment slaughterer
slaughterer's picture







Wed, 10/03/2012 - 14:08 | Link to Comment slaughterer
slaughterer's picture

HPQ fair value now = $12.

Wed, 10/03/2012 - 14:51 | Link to Comment hedgehog9999
hedgehog9999's picture

OIL 88.50 and diving......

Like somebody said this area ES 1430 -1440 is being hevily defended, to punch through we need a couple more HP's happening...... and they will come. (SMH, CSCO and APPLE are next)...

Wed, 10/03/2012 - 14:01 | Link to Comment q99x2
q99x2's picture

Gator gonna git ya.

Wed, 10/03/2012 - 14:01 | Link to Comment Cdad
Cdad's picture

"money on the sidelines"

"Op ex"

"stocks cheap compared to bonds"

"chase for performance"

"qtr end window dressing"

Wisdom from the criminal syndicate known as Wall Street.  When there is no catalyst for stocks, insert your favorite bullshit cliche' and get long with Bernanke bucks.

Wed, 10/03/2012 - 14:02 | Link to Comment TwoJacks
TwoJacks's picture

if you're referring to the small investor, they are net-long but not their biggest position since 2008.  The most interesting thing about their position is in relation to the commercials who are very net-short, the last time the gulf was this big between those two groups was the last week of April 2011.

Wed, 10/03/2012 - 14:02 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Commence shearing.

Wed, 10/03/2012 - 14:03 | Link to Comment polo007
polo007's picture

LONDON (MarketWatch) — When the ugly phrase quantitative easing was first introduced to the world, it was sold as a temporary, emergency measure, to be used in the rarest of circumstances. But now it is establishing itself as part of the normal operation of the global economy.

We are only starting to understand what the long-term consequences of that will be.

But it may well not be hyperinflation, even though that is the alarm most often raised. Instead, the real problem with permanent QE will be the destruction of saving. Over the medium term, that is going to hurt the fabric of the economies where central banks are printing money most enthusiastically. And investors are going to have to learn to avoid them.

Winding the clock back a few years, there was usually just one major central bank rolling the printing presses at any one time. But right now all of them are pumping out freshly minted money. The Federal Reserve, the Bank of Japan, the Bank of England, and now the European Central Bank are all creating new money in different ways.

Nor can it really be presented as an emergency measure anymore. An emergency is something that comes along very occasionally, and which justifies an extreme response. But the U.K., for example, is now heading into its fifth year since the credit crunch, with little sign of output getting back to where it was before the crash. That isn’t an emergency any more. It is just everyday normality.

In truth, QE has gradually shifted from being a one-off to being part of the make-up of the economic system. But is that saving the global economy? Or just leading us to a fresh disaster?

The arguments around this issue get very stale. The QE crowd — very often university economists — argue that printing money is essential to stop the economy collapsing completely. Their opponents — very often hedge-fund managers or taxi drivers — warn darkly of rampant inflation and soaring bond yields.

One side bangs on endlessly about the U.S. in the 1930s and the need to avoid another Great Depression. The other shrieks ever more loudly about Germany in the 1920s and people wheeling around bank notes in wheelbarrows.

Neither side makes much impact on most of us. The reason is simple. The predictions are too hysterical. While the economy may be in poor shape, this doesn’t seem like the grainy newsreel footage of the 1930s. Likewise, for all the warnings of hyperinflation, and the collapse of paper money, there is not much sign of it. While prices may rise persistently in most developed economies, and living standards get squeezed as a result, to describe inflation of 2% to 3% as hyper is a bit, well, hyperexcitable.

The real danger with permanent QE is not inflation at all. It is that savings rates will be destroyed, and that capital will end up being invested in all the wrong things.

Take a look at what QE is actually trying to achieve. The main objective is to reduce long-term interest rates. But if you are a saver, it is not hard to figure out that you are getting a worse deal than you should be. The central bank is driving down the returns you can earn on your money. In effect, it is rigging the market against you. The result? If you have any sense you will stop saving.

Wed, 10/03/2012 - 14:20 | Link to Comment Shatmadim
Shatmadim's picture

One more writer who doesn't understand the difference between inflation and hyper-inflation.  Idiots.

Wed, 10/03/2012 - 15:31 | Link to Comment Racer
Racer's picture

Stop saving and start spending and borrow more is what the banksters want.

As for inflation being only 2 or 3%, over a life time of say 40 years that is massive inflation.

And insurance has gone up a massive amount as for things you need to exist like 'volatile' things (that always go up) have soared like food and fuel.. if only they ONLY went up 3% that would be amazing

Wed, 10/03/2012 - 14:03 | Link to Comment larz
larz's picture

just trade and stfu

Wed, 10/03/2012 - 14:03 | Link to Comment slaughterer
slaughterer's picture

I think I will buy some more "shit breathing" assets when SPY returns to its "strange attractor" number 144.  I am just going to pop some popcorn until then.  

Wed, 10/03/2012 - 14:11 | Link to Comment ekm
ekm's picture

Pyramid scheme

Forced buying


When newscomers stop coming, the only thing the Pyramid can do is spend its own money until:

- Nothing left to spend

- Somebody else calls 'margin' (remember JPM and MFG?)

S&P at 400 is INEVITABLE


There is absolutely only 1 thing that can save 1 or 2 primary dealers from a collapse: APPEARANCE OF A SUCKER.

However the Sucker-in-Chief or otherwise known as Federal Reserve, will they be allowed to buy stocks from the primary dealers?

Wed, 10/03/2012 - 14:09 | Link to Comment mrktwtch2
mrktwtch2's picture

the only place im going all long is into my ladys pussy tonight as aunt flow has left the

Wed, 10/03/2012 - 22:32 | Link to Comment Acorn10012
Acorn10012's picture

Why not try the Hershey Highway?

Wed, 10/03/2012 - 14:11 | Link to Comment slaughterer
slaughterer's picture

Anybody find there was a lot of "burrito talk" at that "Value Investin" conference? CMG, TacoBell, Qdoba.  Seems like Graham disciples can only discuss the value of tacos and chips.    

Wed, 10/03/2012 - 15:19 | Link to Comment The Wizard of Oz
The Wizard of Oz's picture

No wonder WB is getting fatter. 

Wed, 10/03/2012 - 14:13 | Link to Comment drivenZ
drivenZ's picture

that chart looks exactly like reality. sentiment is terrible if you're underperforming, which alot of managers are and looks exactly like sideline money joining the rally.  

Wed, 10/03/2012 - 14:14 | Link to Comment larz
larz's picture

yea but the convexity! come on get real!

Wed, 10/03/2012 - 14:17 | Link to Comment russwinter
russwinter's picture

“QE-whatever has created artificial numbers that the underlying (assets) won’t support. Everything is massively too expensive. With QE, there is now too much capital chasing too few opportunities — even when nobody has confidence in the future!” -- Sam Zell, billionaire real estate tycoon

Half life of Lies and QE getting shorter and shorter:

Wed, 10/03/2012 - 14:24 | Link to Comment Quinvarius
Quinvarius's picture

Find a chart of just about any stock or index that is made up decent companies.  They are almost all breaking out of a decade long range to the upside.  Printing money matters.  And they are going to print like crazy.

Wed, 10/03/2012 - 20:12 | Link to Comment GernB
GernB's picture

Ever hear of a bubble? Care to guess how they form? They form when everyone thinks they have a sure thing and stop asking: what happens when the party ends? They never end well.

Wed, 10/03/2012 - 14:20 | Link to Comment Quinvarius
Quinvarius's picture

Portfolio managers hold various amounts of futures and swaps instead of stocks for various reasons at various times.  Not everything is a trade or an indicator of a trade.  At the end of a quarter, this data may or may not be meaningful.

Or maybe the long postion is just the massive amount of money out there trying to find a home in what will be a very cheap asset class after the 7 QE's blast the ass off of the deflationists once and for all. 

Wed, 10/03/2012 - 14:21 | Link to Comment whotookmyalias
whotookmyalias's picture

Release the Kraken!

Wed, 10/03/2012 - 14:24 | Link to Comment DartThrowingMonkey
DartThrowingMonkey's picture

Net exposure on any futures contract is 0.

Wed, 10/03/2012 - 14:30 | Link to Comment ATG
ATG's picture

Bot opened long SPY Oct calls yesterday:


SP500 Consolidated Futures net short -35,532, having fallen -253,327 last week:

Wed, 10/03/2012 - 14:33 | Link to Comment cabtrom
cabtrom's picture

QE will work simply because there is NO free market. We all know that we have not had a FREE market for over 80 years. The fact is we have a full blown socialist system "cammand and control" the FRN's are just the mechanism by which the goods and services that we produce are diveed out. The only thing that will change is you will get less of what the FRN's would have already bought. So what.

Wed, 10/03/2012 - 14:50 | Link to Comment NotApplicable
NotApplicable's picture

Add to that the fact that the word "work" is very, very subjective.

While it won't work from a coherent Main St., free-market perspective, it works perfectly as a central planning tool of extremely creative destruction.

Wed, 10/03/2012 - 20:16 | Link to Comment GernB
GernB's picture

The irony is it will fail because central planners only have the illusion of control. When the cracks begin to form in that illusion, it will rapidly unravel.

Wed, 10/03/2012 - 15:02 | Link to Comment cabtrom
cabtrom's picture

Lol I love the red down arrows, these are the folks in denial. Just because I have removed your blindfold this does not make me your master I have only been free longer than you.

Wed, 10/03/2012 - 15:24 | Link to Comment DowTheorist
DowTheorist's picture

The stock market is in a primary bull market since June 4. The Dow Theory timely signaled such bull market on June 29. So, a secondary reaction is more than due. Secondary reactions may retrace a significant portion of the previous advance. Hence post may be right.

 Here are 5 reasons why the primary trend for stocks is bullish:

Thus, it is important for investors to appraise the existence of a secondary reaction. Furthermore, for those bullish long term stocks (courtesy of QE), such significant pullback could be good news to jump aboard.

The post QE pullback may turn to be a good opportunity for latecomers to finally "get in". Here are the details as to how to "time" it and place technically effective stops:

Wed, 10/03/2012 - 21:09 | Link to Comment Roandavid
Roandavid's picture

I like the Dow Theory Ok as a tool, and I like Richard Russel a lot as he serves quite nicely to my way of thinking the definition of a "plucky old bastard", but as far as i'm concerned the Dow Theory along with most technical analysis is worth a shit only in the happenstance of an honest to God market, which happens to be something we don't have here.

In the event of a crooked casino offering rigged games of chance, my advice concerning the Dow Theory is to just sit there and happily fondle your stack while enjoying the floorshow.  Maybe play the hookers a little as at least there you'll get some value.

Wed, 10/03/2012 - 22:35 | Link to Comment Jstanley011
Jstanley011's picture

From your first link:

"Most of the commentators are outright bearish."

As gauged by what? Commenters on a Seeking Alpha blog post? Ridiculous.

Wed, 10/03/2012 - 22:37 | Link to Comment Acorn10012
Acorn10012's picture

Darvas thought it was a rigged casino back in the '70s. Same as it ever was.

Do NOT follow this link or you will be banned from the site!