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With Equity Traders 'Longest' Since 2008, Will History Repeat?

Tyler Durden's picture





 

We noted yesterday that NYSE short-interest dropped to a five-month low removing much of the kindling for a centrally-planned world of goal-seek'd equity wealth creation. So when we hear that sentiment is so bad, and everyone's bearish - the simple fact is: they are not. To wit, the S&P 500 e-mini futures contract - the most liquid equity trading vehicle in the world - has pushed to its most net-long position since December 2008. The last time equity traders were this net-long, the S&P fell 22% in the next 11 days. The psychology may be different - from "surely it can't drop any more" to the current "it can't drop much because  Bernanke/Draghi has our back" - but the positioning is just as complacent this time.

 

S&P 500 e-mini futures net long (lower pane) positioning +12% is the most-long since Dec 08... The same kind of overly complacent-driven move would take the S&P down to 1110.

 

Critically the evidence is clear for how we rallied so hard off the Q4 2011 drop last year as the massive net short position was prime for squeezing... not now though.

 

and macro hedgies are as long equities as they have been in two years...

 

and its not just equities and futures, credit markets are the most long credit they have been since 2008...

 

 

Chart: Bloomberg

 


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Tue, 10/16/2012 - 10:43 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

Trade those equities for hot QE cash....cut out the middleman.

 

Tue, 10/16/2012 - 11:16 | Link to Comment TheSilverJournal
TheSilverJournal's picture

Bond yields were MUCH higher in the 2008 sell off than they are today. The 10 yr yield is now 1.7%.

I find it hard to imagine a huge sell off in stocks in order to pile into these even more over priced bonds.

Tue, 10/16/2012 - 11:22 | Link to Comment CPL
CPL's picture

That's what gets me.  The equities are funneling into the Fed.  To be worth anything, more than one buyer has to consider them worth something.

 

At 600+ dollars Apple is priced out of range of a retail investor.

 

Only one that can afford the price points are people with a license to print and that pool is shrinking the longer this carries on.

 

Tue, 10/16/2012 - 14:25 | Link to Comment AAA21
AAA21's picture

It doesn't seem to me that Net Long/Short positions on the S&P500 E-mini can be used as some kind of "contrary indicator". Notice that traders were SHORT big time at the top in 2007.  They finally did go long towards the bottom of the following Bear Market.  Yes, they were quite Long before the last 22% drop - but this was right before the big 2009 rally.   So there doesn't seem to be any clear pattern on how this should be interpreted....

Tue, 10/16/2012 - 10:43 | Link to Comment Lost Wages
Lost Wages's picture

If someone bothered to draw that red arrow there, that must mean it's going to go that way.

Tue, 10/16/2012 - 11:18 | Link to Comment Quinvarius
Quinvarius's picture

I see that a lot.  I like it when they draw in a red arrow down, then a little bounce, then another little red arrow down, because they are so good they can forecast some little bounce you should sell.  Generally these red arrow charts result in a rip your face off rally from day 1.

Tue, 10/16/2012 - 10:44 | Link to Comment LongSoupLine
LongSoupLine's picture

 

better update that first chart showing 1436...we're 1451+ and climbing like a raped ape on a PCP and meth cocktail.

fuck this rigged game.

Tue, 10/16/2012 - 11:13 | Link to Comment BeetleBailey
BeetleBailey's picture

+20 for the raped ape comment.

Tue, 10/16/2012 - 10:44 | Link to Comment PUD
PUD's picture

I think you forget that the FED has the pricing gun and will simply change the expiration date on stocks and dairy products

Tue, 10/16/2012 - 10:44 | Link to Comment iamse7en
iamse7en's picture

Tyler. Please make RSS feeds full subscription again. Such a pain to load every single web page!!!!

 

Anyone know of a link that gives you FULL RSS feed?

Tue, 10/16/2012 - 10:46 | Link to Comment Seorse Gorog fr...
Seorse Gorog from that Quantum Entanglement Fund. alright_.-'s picture

How come no one talks about BAC anymore?

Tue, 10/16/2012 - 11:05 | Link to Comment Shizzmoney
Shizzmoney's picture

Dick Bove is on vacation.

Tue, 10/16/2012 - 11:21 | Link to Comment CvlDobd
CvlDobd's picture

Sorry. Personally I got caught up in the Japan china Iran Syria Israel mess, QE whatever fucking number this is, a nanex report or two, Mitt Romney's hair and tax bill, Citi's exodus, an in all seriousness, my St. Louis Cardinals playing in October. That's a lot for one man!

Tue, 10/16/2012 - 10:47 | Link to Comment francis_sawyer
francis_sawyer's picture

What we need are some Elliott Wavers to come on here (as they have for the past 2 and a half years now), to tell us that the crash is coming in 5...4...3...2... (because the magic chart voodoo is SCREAMING it's about to happen)...

Tue, 10/16/2012 - 11:22 | Link to Comment Cunnial
Cunnial's picture

Don't you mean 5....4....3....2.....2.....2......2.....2.....n.....

Tue, 10/16/2012 - 11:42 | Link to Comment Zadok
Zadok's picture

Kind of like the Christian mainstream prophetic interpretation of Daniel's weeks, the 'gap' is, rounding to the nearest millinium, 2000 years old.

5 4 3 2 2 2 2...

Tue, 10/16/2012 - 11:43 | Link to Comment francis_sawyer
francis_sawyer's picture

More like 5...4...3...a-b-c-d-e-f...2...abc-x-abc-x-abc-x...2...abc-x-abc-x-abc-x... QE3!...

Tue, 10/16/2012 - 10:47 | Link to Comment whotookmyalias
whotookmyalias's picture

The markets will go down when - and only when - the banksters have positioned themselves to profit greatly from the decline.

Why is this so hard to understand?

Tue, 10/16/2012 - 11:45 | Link to Comment Zadok
Zadok's picture

The Bernanke pulled it in 2008, he'll pull it again when the money masters tell him too.

Tue, 10/16/2012 - 10:49 | Link to Comment rajc
rajc's picture

yeah but printing presses were just warming up at that point as of now they are in full gear printing notes...only thing can stop it is if we lose electricity and no back up is availalbe :) 

 

Tue, 10/16/2012 - 10:49 | Link to Comment hedgehog9999
hedgehog9999's picture

Right now they are frantic pushing it up for the Obama bounce..... I am not sure they will succeed as there are forces that want Obama out and would happily push this thing down to make it so. 11 days give or take is what we need....

Tue, 10/16/2012 - 10:53 | Link to Comment campag
campag's picture

BIG anniversary this week - 25 years ago the market fell off a cliff - Europe was shut and the Dow fell 500 points in one session. Thought the constant bears at ZH would remind us !

Tue, 10/16/2012 - 10:55 | Link to Comment AlphaHunter001
AlphaHunter001's picture

 

looking at futures contracts is a great contrary tool - also note that we're at almost a record for long gold, which is why we're selling off in gold/silver...

 

both gold and S&P look toppy, although more retail investors are out of the stock market while plenty are long gold, which means this is additional funds that will pile into the stock market possibly causing an even higher move

Tue, 10/16/2012 - 11:01 | Link to Comment francis_sawyer
francis_sawyer's picture

Hey kids ~ guess who's back?... Harry [Wanger]'s Back!...Harry's Back!...

Tue, 10/16/2012 - 11:05 | Link to Comment LongSoupLine
LongSoupLine's picture

lol, don't ya love the unmistakable stench of trolls?

Tue, 10/16/2012 - 11:26 | Link to Comment Spastica Rex
Tue, 10/16/2012 - 10:59 | Link to Comment adr
adr's picture

But homebuilders are more confident than any time since 2008!!!

Could be due to the fact they don't even have to finish any homes to somehow have their stocks driven up 100% or more in a year.

If you poll the CEO of a company that can keep granting himself more money every month in the form of stock, of course he will be confident.

Tue, 10/16/2012 - 11:02 | Link to Comment AlphaHunter001
AlphaHunter001's picture

 

 

actually home builders can't keep up with demand - there are so many shortages of new homes for sale that the transactions would be up significantly if they had more room to build... i think Toll has a backlog of over $1.3 billion for homes to be built...

 

try reading some corporate releases and financial statements before you make up a fictional statement like they're not finishing homes... some analyst you are LOL

Tue, 10/16/2012 - 11:10 | Link to Comment adr
adr's picture

READ FINANCIAL STATEMENTS AND CORPORATE RELEASES!!!!

You actually believe what you read in corproate press releases? My god you must be an easy mark. I bet "homeless" people on the street take you for $100 or more a day.

Actually I read them to my 3 year old son. They are much better for his imagination. The level of fiction in Toll Brothers report is far beyond what most award winning authors can accomplish.

I find actually looking at the empty lots and half finished homes is a far better gauge than a report put out by con men to juice a stock.

 

Tue, 10/16/2012 - 11:09 | Link to Comment LongSoupLine
LongSoupLine's picture

some analyst you are LOL

 

...and some troll you are.  It couldn't be more obvious even if your name was Trollie Trollenstein.

back to the Yahoo boards you go now. 

Tue, 10/16/2012 - 11:19 | Link to Comment AlphaHunter001
AlphaHunter001's picture

 

 

Troll? You consider stating facts as a troll?

 

If that's the most intellegent comback you can think of, it speaks volumes of your level of education... perhaps it shows that America's education system is really that bad

 

Let me guess, do you believe aliens run the world? If it's raining outside, will you try and convince me it's sunny?

 

At some point you need to grow up and let your ego shrink so you can look at realty.

 

Troll LOL that's funny, when I was stating the exact same fact as ZH! ZH is stating people are long, i merely pointed out that people are massive long gold. So if you believe in one contrary indicator, that must mean by definition you believe in the other!

 

It's called logic, go read a book and educate yourself, stop watching Jerry Springer

Tue, 10/16/2012 - 11:27 | Link to Comment LongSoupLine
LongSoupLine's picture

try reading some corporate releases and financial statements...and educate yourself...

 

I just soiled myself from laughing so hard.  Holy crap, that's some funny fucking shit! 

Tue, 10/16/2012 - 12:19 | Link to Comment Oh regional Indian
Oh regional Indian's picture

I think he works for Troll Brothers...

ori

Tue, 10/16/2012 - 10:59 | Link to Comment AlphaHunter001
AlphaHunter001's picture

 

interesting article

 

Strategists Most Bearish on Equities since 1985

 

also contary indicator, looks like gold is about to sell-off

Gold held in ETFs in new record

 

....This was the ninth week of increased exposure during which time some 152 MT have been added.

Tue, 10/16/2012 - 11:11 | Link to Comment LongSoupLine
LongSoupLine's picture

a "gold ETF sell-off" is not a "gold sell-off".

I thought I told you to go back to yahoo boards?

Tue, 10/16/2012 - 11:17 | Link to Comment BeetleBailey
BeetleBailey's picture

He needs Pesci; tell him to go fuck his mother.....

twice......BING!

http://www.youtube.com/watch?v=7RCcWLQyGUc

Tue, 10/16/2012 - 11:23 | Link to Comment AlphaHunter001
AlphaHunter001's picture

 

 

I realize gold etf is just one component, also look at CFTC holdings of gold, near a record... these are what the world calls 'facts' - look it up

 

You told me LOL you obviously have an inferiority complex, fragile ego and most likely have few friends... I'm guessing you don't have a masters degree or above? Go back to Jerry Springer

 

Until you have some facts or data to back up any statement, this conversation is over.

Tue, 10/16/2012 - 11:31 | Link to Comment Ralph Spoilsport
Ralph Spoilsport's picture

Whatever they're paying you to troll ZH, you're still overpaid. You suck at this.

Tue, 10/16/2012 - 13:12 | Link to Comment fuu
fuu's picture

Why are you linking to a 2 month old article from Ritholtz?

Tue, 10/16/2012 - 10:59 | Link to Comment dvsteenk
dvsteenk's picture

GS earnings beat... on debt trading, ahum? Thanks to a direct phone line to Draghi (& son), Monti, GPap, and the likes perhaps?

Tue, 10/16/2012 - 11:01 | Link to Comment Dr. Engali
Dr. Engali's picture

Don't worry just BTFD Ben has your back..nothing can go wrong. Poor people don't need to eat anway...Ben will just keep printing those statements higher.

Tue, 10/16/2012 - 11:02 | Link to Comment helping_friendl...
helping_friendly_book's picture

I can't take this anymore!

I cashed out and shorted on Oct. 3rd 2011 and this is killing me!

This....Bozo market is breaking my balls!

It's only/ was 5k but, it has become personal!!!!!

Those fuckers are buying the SPY and whilke I wait for the crash it never comes!

WTF!

When will the geezers realize thier pensions are toast and start the revolutioin.

Tired of waiting for the inevitable.

In San Franscico, taking a flight East, tghe combination of flying and the market goiung up will drive me to drink.

Fuck BB!! My he be crushed by his douchery!

 

Tue, 10/16/2012 - 11:09 | Link to Comment dvsteenk
dvsteenk's picture

sorry, Friday is Opex, you don't want to let their positions end in the red, do you? They maximize their profits by moving stocks, rates, commodities, etc. towards maximal profit, against all current logics and fundamentals - no matter how right you are, you're still gonna end up being buttf***d by Bernanke and Draghi

Tue, 10/16/2012 - 11:17 | Link to Comment francis_sawyer
francis_sawyer's picture

Might as well just take a comparison look at the SPX charts in the run-up to the 2008 elections... I'm just going on memory now (becase I have been out of that game basically since then)... In any case ~ I believe the rally topped out right around election day...

Not saying that that's going to happen this time, but it wouldn't be beyond the realm of lunacy that we have come to expect (& which is why I've spent most of my time the last few years practicing my boatmanship)... 

Tue, 10/16/2012 - 11:59 | Link to Comment DUNTHAT
DUNTHAT's picture

TAKE A LOOK AT THE ASSET MANAGER LONG CATEGORY CHART.  YOU WILL SEE BEN AND THE BOYS PLAY IN THIS ARENA.

ITS ALL MANIPULATED.  BEST TRADE IN SOFT COMMODITY MARKETS.

SP500:   https://docs.google.com/open?id=0B16Nxp5pgJBzY1ZXYlpKNVF0MG8

Tue, 10/16/2012 - 11:05 | Link to Comment adr
adr's picture

The BS consumer spending numbers really jumped out at me. When you take the adjustment they made to September it comes out to over $720 billion annualized. That is almost 3/4 of a trillion dollars they added to the economy out of thin air.

Just think about that. Then think about the number of phantom jobs the BLS added over 4 years. The paper economy and the real economy are trillions of dollars apart.

To believe the stock market should trade anywhere near this level is to admit insanity.

Tue, 10/16/2012 - 11:11 | Link to Comment Shizzmoney
Shizzmoney's picture

Equities are hot right now b/c Bonds are paying near to nothing (or soon will be), and stocks are too volitile.  The thing is, these corporate equities will eventually put a strain on corporates who are using their extra cash on hand to lure investors ia dividends at around 3%, and buybacks. 

Workers will feel the brunt of this "unhealthy" way to keep assets appreciating, via MORE wage stagnantion as well as layoffs.

This will not end well.

Tue, 10/16/2012 - 11:14 | Link to Comment venturen
venturen's picture

I predict S&P 500 goes to 5000 of course gas will be $100 gal and bread will be 500 bucks...but no matter I will be working as a galley slave at a Goldman's janitor's house. Deficit will be a Googleplex of Dollars.

 

Anyone know how the next generation of unemployed are affording those re-bubble priced houses? Good thing interest rates will never go up again. 

Tue, 10/16/2012 - 11:22 | Link to Comment Quinvarius
Quinvarius's picture

All I see on that chart is net long at the very bottom, and again now.  The thesis is bullish.  I am in one of those green bars in 2009, BTW.

No banking crisis = no crash.  0% + QEx = no banking crisis.  Know the territory you are fighting in.

Tue, 10/16/2012 - 15:05 | Link to Comment laozi
laozi's picture

Totally agree. Just look at the graph, and that is a clear argument for going all in stocks. What ZH must do to remain bearish is to display other times in history where the long-goers been completely wrong.

Listen to Jim Rickards. He'll tell you US will aim for 5% nominal inflation for at least 10 years ahead. Good luck to all you shorts!

Tue, 10/16/2012 - 11:26 | Link to Comment tongue.stan
tongue.stan's picture

"The last time equity traders were this net-long, the S&P fell 22% in the next 11 days"

 

equity traders = HFT algos

 

the conputers are trading

 

the humans are fucked (I don't count jpm/gs as human)

Tue, 10/16/2012 - 11:30 | Link to Comment Village Smithy
Village Smithy's picture

My feeling is there will be no crash. Real money, the kind that actually was earned and invested and needed by the owner for retirement etc., has left the building as we have talked about for the past 4 years. All that is left is Bernake's gifts,that we will pay for, to his TBTF friends. They all have a vested interest in keeping things stable, so stable it shall stay. Until recently I thought they were fading this rally, preping for a big swoon but the numbers show otherwise.

Tue, 10/16/2012 - 11:38 | Link to Comment cozgenc
cozgenc's picture

You cannot have net long position on futures contracts. There is always somebody on both sides of the contract. It is the difference between speculators and hedgers you are talking about which doesn't mean much as it is not really clear what counts as hedging and what counts as speculation. If you are going to write articles at least get the terminology right.

Tue, 10/16/2012 - 11:42 | Link to Comment Clowns on Acid
Clowns on Acid's picture

Thisis the trading bots going long before the 2nd Presidential debate. If Romney shellacks Obama again...the US Pres election becomes a fait accompli.

I do not believe that Romney is going to be able to manage the disastrous Bernanke/Geithner historical boondoggle effectively, (junkers keep your powder dry), but in the s/t....if Romney wins big again tonite....we will have all the IRA money on the side piling in. I mean c'mon the "private wealth" advisors need a emotional pitch at this stage.

Tell tale sign ? Hillary taking the fall for Obungle's Libya snafu. This comes with a price. Bubba will slowly fade from Obama's re-election campaign. Bubba knows whe to fold 'em. I mean he has to maintain his "dignity" for his future earnings from speaking engagements.

Ok...junkers....if you must. (Idjits).

Tue, 10/16/2012 - 11:54 | Link to Comment RSBriggs
RSBriggs's picture

"Hillary taking the fall for Obungle's Libya snafu."

I really don't know what to make of this.   I can't imagine the pricetag here - what does Obummer have on the Clintons?

Tue, 10/16/2012 - 12:32 | Link to Comment Clowns on Acid
Clowns on Acid's picture

well - Monica's book coming out for one. Also, in the dark back rooms of the DEM party (think Hollywood and MSM money) the power brokers see Obungle as a wild card that can turn and bite the Masters feeding hand. They don't like that.

Bill is scheming to get Hillary as the "top" DEM politician. Hillary replaces Kofi at UN possibly, in 2 or more years?. She is not in the hunt for 2016, she is too old...looking.

Tue, 10/16/2012 - 12:01 | Link to Comment luna_man
luna_man's picture

 

 

As for me...I never second-guess MY MAIN MAN!

Tue, 10/16/2012 - 12:06 | Link to Comment This is the end
This is the end's picture

Tyler, give it a rest with the hyperinflation and "here comes the crash". I know you are all in and your audience is all bears so you have to cater to them to keep the site views up but whatever explanation you want to give to it (the NY Fed is buying eminis, selling gold, silver, oil, gasoline, it's all fixed etc.), it is just not happening. If they are manipulating it tick to tick they are doing one awesome job of it!

Tue, 10/16/2012 - 12:19 | Link to Comment francis_sawyer
francis_sawyer's picture

Tell granny how awesome they are...

Tue, 10/16/2012 - 12:09 | Link to Comment ebworthen
ebworthen's picture

DOW up 120 on no real news or change.

Debt bubble part two getting turgid.

Tue, 10/16/2012 - 12:29 | Link to Comment Biggieshort
Biggieshort's picture

Is anyone else seeing the 51k in vix nov. 55 calls? Someone is hedging a possible "china syndrome" market move. Looks like the same yesterday and on 9/20.

Tue, 10/16/2012 - 12:41 | Link to Comment Tsar Pointless
Tsar Pointless's picture

Hmm. The last time equity traders were this net long, the S&P 500 fell 22% in 11 days, you say?

Well, let's see here now. This Friday is OpEx, so we'll allow the criminal element that controls our financial markets to spike the equity indices as much as possible this week. Then, beginning next Monday, and lasting for exactly the final 11 trading days before the election, we'll see them tank those very same markets in order to get their new PayPal in the White House.

Sounds like a plan to me.

Tue, 10/16/2012 - 12:54 | Link to Comment orangegeek
orangegeek's picture

Primary 3 down on the SP500 is ready to happen.

http://www.bullandbearmash.com/chart/sp500-climbs-support-today

Long overdue.

Earnings up, revenue down season has started too.

 

Tue, 10/16/2012 - 14:55 | Link to Comment francis_sawyer
francis_sawyer's picture

Too bad I won't be able to profit because I went 100% in (in Aug) when you said that, then 200% in (in Sept) when you re-iterated...

Now I'm broke... If I'd have listened to MDB & went long Facebook ~ at least I still might have SOMETHING left...

Tue, 10/16/2012 - 15:31 | Link to Comment DowTheorist
DowTheorist's picture

After reading this post: What to do if one is long stocks?

Hold? Sell out?

The answer: Just honor you stops. Ride the trend with tight protection.

What stops? Those that are technically effective and result in a minor loss if the going gets really tough. Currently such stops would represent a 6.25% for those long the SPY.

How do we place such technically effective stops? The answer here:

 

http://www.dowtheoryinvestment.com/2012/09/why-dow-theory-matters-outsta...

 

 

 

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