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Observe The Short Squeeze

Tyler Durden's picture




 

Confused at why the stock market has risen phoenix-like this week amid no-news on the fiscal cliff, a lack of closure on Greece and EU budgets, and a further collapse in Japan's trade balance? Wonder no longer; for the explanation is simple - a massive and dramatic short-squeeze has created a 200bps outperformance this week among the most-shorted Russell 3000 names. Impressive indeed; sustainable? One wonders if an "expert network" was used by various known and unknown CT-based hedge funds for "advice" to ramp stops in the highest beta, most shorted stocks in a market in which volume would be so abysmal any entity which already controls 10% of NYSE volume could do with the market as it saw fit?

From Friday's close...

 

and why the squeeze is over...

Chart: Bloomberg

 

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Fri, 11/23/2012 - 13:16 | 3006708 Oldballplayer
Oldballplayer's picture

Well sure, its POSSIBLE.  But of course that would never happen because its unethical.  Right?

Fri, 11/23/2012 - 13:44 | 3006810 flacon
flacon's picture

This market is FUBAR. 

Fri, 11/23/2012 - 14:15 | 3006926 DavidC
DavidC's picture

If it IS the case, it certainly shows how absolutely desparate they're getting. ANYTHING to keep the stock markets up.

DavidC

Fri, 11/23/2012 - 13:18 | 3006715 slaughterer
slaughterer's picture

MCP, zum Beispiel.  

Fri, 11/23/2012 - 14:22 | 3006944 flacon
flacon's picture

Ich wusste dass nicht.

Fri, 11/23/2012 - 13:18 | 3006717 Water Is Wet
Water Is Wet's picture

This article shows very little.  At market bottoms, shorted stocks bounce faster because there are more forced buyers.  In any broad rally a stock with high short interest will outperform.  This chart is indicative of nothing special.

Fri, 11/23/2012 - 13:29 | 3006754 Non Passaran
Non Passaran's picture

- thin volume
- no particularly good news (except German "confidence" ;-))

Of course that IS special. But you are right, the weird is new normal because manipulation has become rampant.

This could be close to end of this bounce.

Fri, 11/23/2012 - 13:22 | 3006729 Non Passaran
Non Passaran's picture

I sold some PM miners that gained way too much today and bought some short positions. I am still net long in PMs, but sorry, today's rally looks suspicious!
Check out the volume, it's pathetic.

Fri, 11/23/2012 - 13:22 | 3006731 orangegeek
orangegeek's picture

Let's not get caught up by a day's activity or even a few days.

 

SP500 weekly is not looking healthy.

 

http://bullandbearmash.com/chart/sp500-weekly-trend-continues-losing-15/

 

It is interesting to hear about the misery coming from Europe and the Fiscal end in the US while the SP500 is up over 3% this week.  Gong show continues - let's see for how much longer.

 

 

Fri, 11/23/2012 - 13:36 | 3006783 DavidC
DavidC's picture

1 - It's not possible to view the chart(s) without being a member and logging in.

2 - On a daily basis, the Dow and S&P are just into overbought, on a weekly basis they are still overSOLD. Monthly, yes, they are definitely still in overbought (low Bollinger on my charts is at around 11,350 Dow, 1180 S&P).

3 - Intraday, on the periods I look at, they are overbought.

DavidC

Fri, 11/23/2012 - 13:24 | 3006738 1fortheroad
1fortheroad's picture

The primary dealers know exactly where your shorts are.

Fri, 11/23/2012 - 13:44 | 3006813 Boilermaker
Boilermaker's picture

Exactly.  I'm sure they have full access to all positions and your stops.

No fucking doubt about it.

Fri, 11/23/2012 - 15:00 | 3007058 WmMcK
WmMcK's picture

I'm trading the GSR between 48.5 and 57.5.
Some off here below 51.5, more at 48.5.
There -- now they really know all my "stops".
They can keep it in this range as long as they want for me.
My hands are strong and I'll try to refrain from boating.

Sat, 11/24/2012 - 00:57 | 3008095 Nage42
Nage42's picture

Right where they've instructed you to keep your shorts:

 

Wadded up in a tight ball between the two-legged market to back-stop the market's quivering sphincter for when it all drops out in a wet bubbly spray.

 

Queue WB7 visual graphical warfare imagry~

 

Nage42  ;)

 

Fri, 11/23/2012 - 13:25 | 3006742 slaughterer
slaughterer's picture

Silver bitchez

Fri, 11/23/2012 - 13:33 | 3006775 swissaustrian
swissaustrian's picture

That's a short squeeze in pms days before op/ex. Pain for the right guys, the commercials. Fuck the commercials.

Fri, 11/23/2012 - 17:12 | 3007323 SilverSavant
SilverSavant's picture

If you haven't changed at least 50% of your ass and assets into silver then you have an IQ of less than 60.  silver means hard metal in you possession and off the effing radar.   Silver is the investment opportunity of not just the effing century, but of the effing effing effing effing world.   Do you know what the eff, effing means.    Can you understand retard?

Fri, 11/23/2012 - 17:18 | 3007338 SilverSavant
SilverSavant's picture

I am living in CH these days and my lovely CH mitely has left for the day and I have gotten into the liguor cupboard.   Still, what  I have to say is the words of a guy who has quite wasting his words on people who haven't got a clue.   I love u guys at ZH and this is for you.   Buy all the effing silver you can and then when you finally meet me, spend some of it and make my gal proud.   She is wonderful, but she can't understand what TF I am talking about.

Fri, 11/23/2012 - 17:39 | 3007376 SilverSavant
SilverSavant's picture

I am living in CH these days and my lovely CH mitely has left for the day and I have gotten into the liguor cupboard.   Still, what  I have to say is the words of a guy who has quit wasting his words on people who haven't got a clue.   I love u guys at ZH and this is for you.   Buy all the effing silver you can and then when you finally meet me, spend some of it and make my gal proud.   She is wonderful, but she can't understand what TF I am talking about.

Fri, 11/23/2012 - 13:31 | 3006758 JustObserving
JustObserving's picture

Confused at why the stock market has risen phoenix-like this week

Bernanke providing extra confetti to spend on Black Friday and Cyber Monday?

Never short a manipulated market

Fri, 11/23/2012 - 13:31 | 3006765 DavidC
DavidC's picture

"and why the squeeze is over..."

I hope so, I hope so.

DavidC

Fri, 11/23/2012 - 13:32 | 3006773 resurger
resurger's picture

It's as if they have an algorithem that reads the short's and the long's togther ...

Fuck you Bernanke

Fri, 11/23/2012 - 13:32 | 3006774 holgerdanske
holgerdanske's picture

I have been thinking along the same lines. There are fewer participants in the market. There is more money created out of nothing! Ther is absolutleynothing preventing the creators of more paper buying the universe, if they so desire. And fewer people to inform about the intention.

However, what we are seeing in todays move is simply a devaluation in the dollar, compared to EUR. Have a look at the price of gold in EUR and Dollars.

In the longer run, who knows. The stock market in Weimar Germany and even recently in Zimbabwe hit records day after day, until it suddenly didn't.

 

Are we going to see the same here. I have no doubt. When, is the 64000 $ question.

 

 

 

 

 

 

 

Fri, 11/23/2012 - 13:35 | 3006782 swissaustrian
swissaustrian's picture

Maybe somebody leaked the info three weeks early that the FED is going to extend op/twist by purchasing long terms treasuries without sterilizing them using short term treasury sales.

Fri, 11/23/2012 - 13:37 | 3006785 Quinvarius
Quinvarius's picture

80 Billion dollars a month, IMO. 

Fri, 11/23/2012 - 13:38 | 3006790 Wardley
Wardley's picture

Interesting finding Tyler.

I wonder which tool did you use to plot the red line? (most shorted Russel3000)

Thanks.

Fri, 11/23/2012 - 13:42 | 3006804 Boilermaker
Boilermaker's picture

Yea.

And, they'll do it over and over and over.

So, get fucking used to it.

Fri, 11/23/2012 - 13:45 | 3006815 Boilermaker
Boilermaker's picture

Time to bang the shit out of the close.

Fuck it.  Get 20 handles in.

That'll fill the Toys'R'Us tonight.

Fri, 11/23/2012 - 13:46 | 3006818 Itch
Itch's picture

Now just look how easily they can do this...i would love to know how the fuck they manage it. Not complaining today, but more and more i am witnessing the absurd piranha price action over miniscule 10k lots, its as if they have carte blanch to do what they like with the price my the truth be dammed. I would love to know how they actually manage it, whether its through some mixture of complicated optionality and HFT. or if central banks just tell them the levels to stay away from, all else is fair game. Either way, im beginning to feel like a lamb lost in an abattoir. 

Fri, 11/23/2012 - 13:52 | 3006837 Boilermaker
Boilermaker's picture

They WILL do it.

Period.

You WILL FUCKING get CONFIDENT.

Fri, 11/23/2012 - 14:15 | 3006923 SaveTheBales
SaveTheBales's picture

Confident?  You think we're not confident?  We're on a Mission from God, good man. We're walking softly and carrying nuclear weapons.  We are long Hostess.  What the hell could possibly go wrong with Ding Dongs?

If you are trading thin markets and don't expect this, then just stop.  They're going to do shit like this, because they make a lot of money at it.  (or they'd stop).  That's why I stack now, and don't trade.  This shit is for pros.

Fri, 11/23/2012 - 14:02 | 3006877 holgerdanske
holgerdanske's picture

If you are lost, maybe that is not so bad. It is when you get found you get dead!

Fri, 11/23/2012 - 14:25 | 3006946 WmMcK
WmMcK's picture

"Either way, im beginning to feel like a lamb lost in an abattoir." I'm happy to remain just: "a heterosexual in khaki shorts" - Python

This is NOT a recommendation to short, of course.

Fri, 11/23/2012 - 13:47 | 3006819 slaughterer
slaughterer's picture

 Re-test of ES 1425 (50 DMA) early next week (Cyber Monday) until we see a resumption of selling.  

Fri, 11/23/2012 - 13:55 | 3006850 Boilermaker
Boilermaker's picture

I love a good simplistic easy to calculate retarded (and rounded to the nearest 50!) moving average to base massive moves on.

It lets the retards 'play along'.

Fri, 11/23/2012 - 13:59 | 3006870 gjp
gjp's picture

I love your bitterness, Boiler.  Obviously, because I share it.  But really, how can you not just be appalled day after day?  Fuck it, where's my Obamaphone?

Fri, 11/23/2012 - 14:13 | 3006905 slaughterer
slaughterer's picture

I am just looking for a point to re-short using retarded calculations to fade a full retard bull move. 

Where do you thing the intermediate top is Boiler or Tyler (HYG)?

(crickets)

Fri, 11/23/2012 - 14:15 | 3006924 Boilermaker
Boilermaker's picture

No..No..No...

'moving day averages' based on multiples of 50 are unbelievably proven and legitimate tools.

That's the real shit, right there.

Fri, 11/23/2012 - 16:51 | 3007273 w00dmann
w00dmann's picture

As in, 50 DMA or 50 EMA?

Fri, 11/23/2012 - 13:48 | 3006823 PUD
PUD's picture

MERKEL SAYS DONE DEAL MONDAY

Fri, 11/23/2012 - 13:48 | 3006824 slaughterer
slaughterer's picture

MCP ... laecherlich, laecherlich, laecherlich

Fri, 11/23/2012 - 13:59 | 3006871 holgerdanske
holgerdanske's picture

MCP ... laecherlich, laecherlich, laecherlich

 

translation:,

laughable, etc, etc, etc ...  cough!

Fri, 11/23/2012 - 14:05 | 3006825 Yen Cross
Yen Cross's picture

 The casino wonders why they don't have anyone to play with besides themselves. ES ramped back over  1400?  On hopium...

  I'll bet that the Greek news(bailout), will be a sell the fact, after this ramp up...

Fri, 11/23/2012 - 13:50 | 3006833 mdtrader
mdtrader's picture

The shorts have been smashed. If I wanted to get short 1415 on the SPX would be the area of interest.

Fri, 11/23/2012 - 13:53 | 3006839 El Hosel
El Hosel's picture

Its the "Porn market", every scene ends the same.... with a happy squirt higher.

Fri, 11/23/2012 - 13:54 | 3006848 slaughterer
slaughterer's picture

Now for the AAPL ramp, lulz

Fri, 11/23/2012 - 13:58 | 3006865 buzzsaw99
buzzsaw99's picture

it's just algos flipping the same shares back and forth

Fri, 11/23/2012 - 14:01 | 3006875 Boilermaker
Boilermaker's picture

Works like a fucking charm.

Fri, 11/23/2012 - 13:58 | 3006866 Boilermaker
Boilermaker's picture

BANG THAT FUCKING CLOSE!!!

BANG IT!!!

Fri, 11/23/2012 - 14:01 | 3006874 gjp
gjp's picture

Really was orchestrated to perfection, wasn't it?  Who says the Maestro is no longer on the scene?

Fri, 11/23/2012 - 14:06 | 3006881 Boilermaker
Boilermaker's picture

They'll do whatever the fuck they want to do.

Then people, and this site, attempt to discuss it with charts, 'moving averages', and other pathetic bullshit.

IT'S BEING FUCKING MANIPULATED.

Fri, 11/23/2012 - 14:48 | 3007026 Randall Cabot
Randall Cabot's picture

Yes, but there is method to their madness. I just wish I knew what it is.

Fri, 11/23/2012 - 13:59 | 3006872 slaughterer
slaughterer's picture

I am feeling so confident, I need to run out and buy 25 iPad minis for office stocking stuffers.  

Fri, 11/23/2012 - 14:03 | 3006879 SmoothCoolSmoke
SmoothCoolSmoke's picture

Unreal.......

Fri, 11/23/2012 - 14:15 | 3006925 Compwiz4u
Compwiz4u's picture

The "legal" Counterparty Risk Management Group, which includes all the big banks, hedgers, etc., know the positions and use that info to profit, like today's squeeze.

I also believe that they use that knowledge when stocks are ripe with profits so they can naked short them at critical junctures.

The market is rigged much more than most realize.

 

 

Fri, 11/23/2012 - 14:21 | 3006943 Boilermaker
Boilermaker's picture

The SEC protects your privacy with regard to holdings, stop loss levels, an ordering patterns.

Everyone knows that.  Your premise is bullshit.

It's just a full blown buying spree on a shortened trading day.  Everyone was mouse clicking the shit out of their E*TARD account.  There is no limit to the amount of retail interest in the market.

Where did this moon bat come from?

Mon, 11/26/2012 - 02:40 | 3010747 Compwiz4u
Compwiz4u's picture

Then please tell me exactly what the Counterparty Risk Management Group looks at to manage their risks?

Here is their website

Curiously, they organized on August 6, 2008 just before the crash, which some think was engineered.

I'll make it easy for you as this is from SECTION IV-6a of RISK MONITORING AND RISK MANAGEMENT:

"Large integrated financial intermediaries should be able to use exposure aggregation data both prospectively to avoid undue concentrations and, if necessary, in real time to react to unanticipated counterparty credit events."

And this part shows that they will look everywhere for that data.

"...counterparty credit risks, including correlations and directionality, should be evaluated based not only on positions within a large integrated financial intermediary, but also considering available data regarding the size and direction of positions the counterparty has at other firms."

In case you don't realize it, when you own a stock or bond you are their counterparty.

Mon, 11/26/2012 - 02:47 | 3010748 Compwiz4u
Compwiz4u's picture

Sorry, here is a working link: Counterparty Risk Management Group

 

 

Fri, 11/23/2012 - 14:17 | 3006933 Boilermaker
Boilermaker's picture

DOW 13,000 AND SPX 1,400

Oh my fucking god....

That's just tremendous and completely psychologically valuable.

Fri, 11/23/2012 - 21:44 | 3007863 Never One Roach
Never One Roach's picture

"Rickards advises investors to sell assets if they're sitting on large capital gains because those taxes, now 15%, will rise anywhere from 20% to 40%. "I don't know where that number will come out but I know it will be higher," says Rickards."

 

http://finance.yahoo.com/blogs/daily-ticker/careful-wish-regarding-fisca...

Fri, 11/23/2012 - 21:46 | 3007866 Woodrox
Woodrox's picture

it started with pelosi last friday

Sat, 11/24/2012 - 11:24 | 3008352 RopeADope
RopeADope's picture

You mean when she said, "We wanted to send the markets a message that us politicians will not allow markets to force us to balance the budget and take away our vote buying giveaways."

 

That occasion?

Fri, 11/23/2012 - 23:55 | 3008040 ak_khanna
ak_khanna's picture

The stock, commodity and currency exchanges have been reduced to gambling dens whereby the more powerful traders with deep pockets move the markets to maximize their own profits at the expense of the remaining not so powerful players. The big boys have enormous money power to move the markets in the direction which results in maximum profits for themselves. They effectively use the media to lure the other players in the market to a position where they would incur maximum loss.
The markets will fall only when the banksters have eliminated all the short positions and only they themselves have positioned themselves to profit when the market falls
OR
When an unexpected world event catches the banksters with their pants down and the softwares they use to rig the markets go berserk beyond their control.

http://www.marketoracle.co.uk/Article35345.html

www.letstalkmoney2012.in

Sat, 11/24/2012 - 16:59 | 3008748 DowTheorist
DowTheorist's picture

Excellent post. So I all the action we saw in the last few days was merely a short covering rally.

 

This fits with another two factors:

 

1. Volume has been declining as the stocks advanced. Always a bearish sign.

2.  A primary bear market signal was flashed on Nov 16. So the odds favor declining prices in the future.

 

http://www.dowtheoryinvestment.com/2012/11/dow-theory-recap-what-are-oth...

 

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