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

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
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.


Randall Cabot's picture

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

slaughterer's picture

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

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.



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?

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.

Boilermaker's picture

DOW 13,000 AND SPX 1,400

Oh my fucking god....

That's just tremendous and completely psychologically valuable.

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."



Woodrox's picture

it started with pelosi last friday

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?

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
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.



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.