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What A Difference A Year Makes

Tyler Durden's picture





 

As we approached the debt-ceiling debacle last year, there was much wailing and gnashing of teeth among talking heads and portfolio managers and indeed the latter actually started to put their money where there mouth was - i.e. they sold/reduced exposure to US equities. A year or so later and the fiscal cliff and debt-ceiling SNAFU is once again upon us but this time, while sentiment is just as negative, real speculative positioning is at multi-year record high longs. It would seem to us that all those holding out for a hero in Congress and some compromise to provide a liftathon in stocks are already all-in (as the two charts below indicate oh so clearly). One can only hope they are not disappointed as the 'money on the sidelines' appears to be more exposed than ever and unlike last year's massive net short positioning, there is no more squeeze ammunition left for the next leg.

 

Last Fall's debt-ceiling-inspired sell-off and massive short-biased position (lower pane) provided just the ammunition to squeeze a huge (central-bank-inspired) rally for the first quarter of the year and claim victory for the bulls from the jaws of defeat... this time the situation is very different...

 

and as the longer-term chart of relative positioning shows - speculative positioning is as long as it has ever been heading into this extreme binary uncertainty...

 

The last time we were this net long, the S&P 500 dropped over 20% in the next two months... and the S&P 500 has averaged a -3.3% performance over the following six-months from a 2-sigma net speculative long position such as this - and a 63% hit rate since record began.

It would appear that any sustained rally from here will need to come from fresh and excited money as opposed to the short-squeeze of last year.

We humbly suggest that the next mouth-breather that mentions markets are set for a huge rally if fiscal cliff resolution occurs OR opines of the money that is so desperate to chase into stocks when Boehner and Obama speak next - tell them to kindly look at these two charts and explain how traders have never been so net long stocks...

Surveys Do Not Matter! Real Money Positioing Matters!

Charts: Morgan Stanley and Bloomberg

 


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Sun, 11/25/2012 - 19:44 | Link to Comment willwork4food
willwork4food's picture

actually I'm still dreaming of the redhead in Gangnam over @ W7..

Sorry, you were saying?

Sun, 11/25/2012 - 19:54 | Link to Comment Yen Cross
Yen Cross's picture

 Officer " Toni Baloni" , is guarding the stables over at

33 Liberty Street  New York, NY 10045  " Gangnam style"... Nice work Banzai-7.

Sun, 11/25/2012 - 20:02 | Link to Comment fonzannoon
fonzannoon's picture

Hey Yen have you seen any of my other buddies on here lately? Kito, Engali? Did they go missing or did I?

Sun, 11/25/2012 - 20:13 | Link to Comment Yen Cross
Yen Cross's picture

 I'm on a stop over in Ohau, (refueling)... Left Carlsbad Ca. early this morning. Caught a my connecting flight in Burbank.It's my first chance to really read Z/H today. No, have not seen them...

They are probably traveling/getting next week in order, after a long holiday W/E.  Things are getting tense, towards year end...

 

Sun, 11/25/2012 - 20:18 | Link to Comment fonzannoon
fonzannoon's picture

Enjoy it!

Sun, 11/25/2012 - 20:25 | Link to Comment Yen Cross
Yen Cross's picture

   Not a vacation Fonz. Just a quick stop on the way to SYD. Asia is one day ahead, so I avoid the business travel, put's me in Asia on Tuesday morning this way.

   How is the clean-up coming along? I watched special on Discovery Channel, earlier. It focused more on New Jersey.

Sun, 11/25/2012 - 20:43 | Link to Comment fonzannoon
fonzannoon's picture

Ah my bad, I misread that and thought "refueling" was metaphorical. Long day..

If you are inland a few miles it seems like everything is back to normal. If you are right on the coast you are done. Luckily I am inland a bit.

Sun, 11/25/2012 - 20:53 | Link to Comment Yen Cross
Yen Cross's picture

  So basically "every one(locals) is/are taking up the slack"?  The government couldn't find it's way out of a one legged ass kicking contest./

Sun, 11/25/2012 - 21:14 | Link to Comment fonzannoon
fonzannoon's picture

I would love to tell you the locals are on it but I'd be lying. It's freaking freezing by the water. Anyone who got power back is getting things together. In a lot of towns the damage was overwhelming. There still is no power (a buddy of mine flew in the other night, said it was really scary looking down and seeing how much was totally dark). Lot's of people who could get out are still staying with relatives. Anyone trapped there says it's like mad max. National guard there and looters everywhere. Not good man.

Sun, 11/25/2012 - 21:18 | Link to Comment Yen Cross
Yen Cross's picture

 CNBS will be all over that one! " NOT" .   Thanks for the update Fonz.. 

Mon, 11/26/2012 - 01:07 | Link to Comment OpenThePodBayDoorHAL
OpenThePodBayDoorHAL's picture

if you're looking to share a beer in SYD with a fellow ZH'ret me know

Mon, 11/26/2012 - 01:05 | Link to Comment old naughty
old naughty's picture

Gangnam kim-twin style.

Purr-fect.

Sun, 11/25/2012 - 19:44 | Link to Comment Jason T
Jason T's picture

devils advocate here.. but earnings did quite well into 2012 thus justifying the rally.. but did the earnings come good due to rebound in stock markets?  that i don't know.

 

http://research.stlouisfed.org/fred2/series/CP

Sun, 11/25/2012 - 20:06 | Link to Comment ebworthen
ebworthen's picture

Corporate profits from cutting employees and price gouging.

This does not equal employment or long term earnings growth.

Millions upon millions living on credit cards or cashed out IRA's and 401K's.

If you can't see the bubble, you are either in it or on it.

Mon, 11/26/2012 - 01:27 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

Barron's this weekend had a lot of bearish comments by Carmen Reinhart & Kenneth Rogoff (authors of This Time is Different) as well as Jim Chanos (China bear) and discussion of the DC machinations re ther Fiscal Cliff.

Review of Barron's -- Dated 26 November 2012

http://tinyurl.com/c2pdmwj

Sun, 11/25/2012 - 21:02 | Link to Comment sitenine
sitenine's picture

@Jason T

That chart is resuming exponential growth.  There is no 'devils advocate' here.  The devil is the Fed pumping money into the shadow banking system, which in turn makes things seem a little more 'normal' as we have come to know it.  Unfortunately, 'normal' means an exponential growth curve for corporate earnings.  Do you seriously think that's a sustainable 'organic' model for economic prosperity?  I posit that it's something else entirely, Sir.

Sun, 11/25/2012 - 21:10 | Link to Comment mkhs
mkhs's picture

Wait until it is updated for Q3.

Sun, 11/25/2012 - 19:48 | Link to Comment Bear
Bear's picture

Es 1400 has been crowded too LONG

Sun, 11/25/2012 - 19:49 | Link to Comment Whoa Dammit
Whoa Dammit's picture

Walmart employees kill shoplifter in parking lot:

http://www.wsbtv.com/news/news/local/alleged-walmart-thief-dies-during-c...

"When police arrived, they found the employees on top of the man. The officer put the man in handcuffs and said he noticed there was no resistance from him.

The officer had the employees get off the man, and noticed the man was unresponsive and bleeding from his nose and mouth."

Mon, 11/26/2012 - 13:57 | Link to Comment blunderdog
blunderdog's picture

I realize "raises" aren't typically part of the Walmart career experience, but hell, if the guy who murdered the shoplifter doesn't get one, it'd make me question Walmart's commitment to low prices everyday.

Sun, 11/25/2012 - 19:49 | Link to Comment fonzannoon
fonzannoon's picture

It seems like everytime it's mentioned how there are no shorts left it feels like a short squeeze follows.

Sun, 11/25/2012 - 19:51 | Link to Comment q99x2
q99x2's picture

This time seems more in line with the roaring twenties than the depression days. The decision to bypass the debt ceiling and raise it to nearly infinity might be the blow off. BTFD.

Sun, 11/25/2012 - 21:29 | Link to Comment CH1
CH1's picture

The market IS NOT A MARKET - it is theater, managed by the Fed and their pals. 

Stay away.

Sun, 11/25/2012 - 19:58 | Link to Comment EARLPEARL
EARLPEARL's picture

WHAT WOULD THE MARKET DO IF ANY OF THE BELOW HAPPENED?

1. greek defaults

2. israel attacks iran

3. china attacks japan?

4.germany leaves euro?

ALL OF THE ABOVE

Sun, 11/25/2012 - 20:05 | Link to Comment Dollar Bill Hiccup
Dollar Bill Hiccup's picture

Hit new highs?

Wait ... is that a trick question?

Sun, 11/25/2012 - 20:58 | Link to Comment Rathmullan
Rathmullan's picture

ANSWER: Spin the event(s) as a positive for growth.

Sun, 11/25/2012 - 20:23 | Link to Comment VonManstein
VonManstein's picture

Thank you! perspective for any johny come lately... All this sentiment drivel i hear all the time from bulls pretending to be contrarian holds no water when faced with the numbers and facts

Good work Tyler

Sun, 11/25/2012 - 20:02 | Link to Comment ebworthen
ebworthen's picture

Net long?

In this enviromnment?

Let's hope it's hedge funds and banks and not Mom and Pop, because we know the little people won't be bailed out ever.

Sun, 11/25/2012 - 21:52 | Link to Comment Ballin D
Ballin D's picture

I have a hunch the 'pro's are abstaining from placing bets either way for the time being.  DB/pension plans and mom and pop could be responsible for the net long since they tend to only ever go long and everyone else could just be confused/frustrated enough to watch things play out for a bit before taking positions.

Sun, 11/25/2012 - 20:04 | Link to Comment knukles
knukles's picture

Ah, all this pandering by the right wing sore looser press trying to embarrass the gubamnit, destroy the economy, disenfranchise the poor, needy and underemployed (and who should be trying to find a job right now when none of the evil capitalists are hiring) even closing down the Twinkie factories, laying off thousands, disenfranchising the yet to be born poor chillen' from ever tasting a Ho Ho....
Y'all oughta be buyin' stocks to make Ben and everybody else feel good about themselves, make happy people as members of a happy productive manufacturing based society, innovative to the last minute with inceptions in green, renewable, sustainable, horseshit based energy, fuel-less cars, joyous people in Detroit rebuilding their mansions, everybody happily contributing additional revenue to the gubamint for greater investment....
Recharge America and every EBT card before sunrise, everyday.

Who thinks up this shit?

Sun, 11/25/2012 - 20:17 | Link to Comment Yen Cross
Yen Cross's picture

 It's just smoke and mirrors... Good cop,bad cop B/S...

 Here is a fun thread to pass the time... The American Expatriation Guide | zero hedge

Sun, 11/25/2012 - 20:27 | Link to Comment Clever Name
Clever Name's picture

If you reword this a bit, sounds like classic MDB.

Are you in there?

 

How could this be anything but bullish? What isnt these days?

Even the election farce? Oh, right...

Sun, 11/25/2012 - 20:17 | Link to Comment orangegeek
orangegeek's picture

SP500 big bounce last week was on extremely low volume.

 

http://bullandbearmash.com/chart/sp500-weekly-362-austerity-debt-fiscal-...

 

Should be interesting to see what happens this week.  We are likely headed for a huge drop.

Mon, 11/26/2012 - 06:57 | Link to Comment Non Passaran
Non Passaran's picture

I agree, I said that in a comment as well (last Friday noon as it was happening). I bought short positions that afternoon, all were in red by close but should be green soon. I will add more today...

Sun, 11/25/2012 - 20:17 | Link to Comment disabledvet
disabledvet's picture

i mind has been thinking of 4 years ago actually. the only change since this has been Republicans retaking the House...a prospect that looks good at being retained in two years time. the fact of the matter is President Obama had 4 years to "do whatever" then...and he passed the largest healthcare entitlement in history as a consequence...and it is now law. "as a tax" i might add. he now has two years before he's officially a lame duck. we shall see what the plans are once his new cabinet is named which is supposed to come as early as January...but maybe sooner in some cases. Will the USA go over the (phony) cliff? Probably. Would it be better if all sides had an agreement prior to? yep. do i have any idea what that agreement would be in even its most basic form? nope. do i care? not really. obviously i wouldn't want to be soldier in the field and find myself not getting paid (as happened under Jimmy Carter.) Nor would i be happy if i was a postal worker and had my benefits administration transferred over to medicaid and social security. how about an air traffic controller dealing with "air rage"? no thanks. what else am i missing? oh, yeah...FEMA and Sandy. That should be a good time. can you say "front door bailout" this time? we'll see. never had a "more net long position in history"? REALLY? give it a break. the 90's were NOT that long ago you idiot. You don't even know what long is until you IPO "the globe.com" and have it worth more than sears on its opening day of trading...only to see it go bankrupt three months later. i'm long this market to keep up with the ten percent inflation that isn't being reported. stopped raining on my parade by telling my i'm going to get crushed in the market AND get killed by unreported inflation numbers. i've got enough bad news to worry about as is...

Sun, 11/25/2012 - 20:19 | Link to Comment Rathmullan
Rathmullan's picture

Yeah, well AA+ is the new Tripple A and then AA becomes the new Tripple A and then AA- and so on. Who cares about absolute risk in a funny money world. shit on washington, piss on wall street

Sun, 11/25/2012 - 20:19 | Link to Comment JustPrintMoreDuh
JustPrintMoreDuh's picture

The ponzi will continue to work ... until it doesn't.  

Sun, 11/25/2012 - 20:37 | Link to Comment max2205
max2205's picture

If they cap deductions, the shit will hit the fan. Same as raising taxes and fucks everybodies investment model and tax planning.

Sun, 11/25/2012 - 20:39 | Link to Comment chump666
chump666's picture

No, I don't think the spec long is due to a possible resolution with the fiscal cliff, which is NOT really a significant market mover either way.  Otherwise we would be down 10%+ by now (with rally off lows once something 'positive' occurs).   What has happened is the specs have been suckered in by the rally after the Obama sell off, which is all out of whack due to HFTs gaming the MA's.  Earnings have been dreadful, so essentially any selling is due to that factor.  The fiscal cliff is side issue for the market. 

The market has it's own tune which is being played by the machines...that's it.

 

Sun, 11/25/2012 - 20:46 | Link to Comment Yen Cross
Yen Cross's picture

C/666 These markets are delusional! The trend is your friend...  The rats are scrambling, for their cheeze...  Don't try to rationalize the trade. Just laugh, "under your skin".

 

Sun, 11/25/2012 - 21:06 | Link to Comment chump666
chump666's picture

But you caught that EUR spike?  If so, well done.

 

Sun, 11/25/2012 - 21:14 | Link to Comment Yen Cross
Yen Cross's picture

 It is well documented... I don't trade the ponzi EURO!  My profits were far less then other cross traders...  aud/jpy.

  I understand the trade intimately.

I'll settle for reliable profits vs "roulette wheel" trading styles every time!

 

Sun, 11/25/2012 - 21:40 | Link to Comment chump666
chump666's picture

Actually a short is there, and it's Asia, not Shanghai though, but Japan and HK.  Overbought.

Sun, 11/25/2012 - 21:48 | Link to Comment Yen Cross
Yen Cross's picture

 Massive Short! c/666, A smart man you are ;-)

Sun, 11/25/2012 - 21:59 | Link to Comment Orly
Orly's picture

It looks like the Aussie crosses are about to take a hit, as well.  Aussie/Loonie just made a textbook head and shoulders formation on the Daily, which could imply a full retracement to par.  The pair hasn't rolled over yet on the H4 but I am watching it closely.

If that happens, expect the other crosses to move down in turn, especially the AUDJPY, which is way overbought on some mouthpiece talk (Abe...), who came out tonight and said he respects the independence of the central bank...whatever that means.  Personally, I think it means that he knows he cannot jaw-bone JCB policy and is backing off his blustering statements from last week.

Of course, the question then becomes how much is the market going to discount that incredible ramp-job on all the yen crosses?  Maybe a lot?  Maybe a little.  How do you think?

:D

Sun, 11/25/2012 - 22:30 | Link to Comment Yen Cross
Yen Cross's picture

U ok sweet heart? In a friendly conversation. I'm not inviting you to   "B and B"...  Did the currency Queen do well last week/

  Those H/S patterns were spotted days ago, with "neck lines" that originate from "left to right".  They completed all ready, or are "head fakes"...

  ORLY I deeply respect your trading prowess... Those gartly patterns? not so much... use your brilliant intuition... :D

Sun, 11/25/2012 - 22:10 | Link to Comment chump666
chump666's picture

Orly,

Which would mean that there could also be a retrace (down) on the Nikkei (rallied from Abe's jawbone), from memory you called the rally pre-Greek/EU meeting flop on Asia holding gains.  Good call.  So, do we see a sell off on open if Asia blows next few hrs?

IMO the current meltup (HFT driven) could be inspired by Asian gains, as European madness is always priced in and US markets are still not done with profit taking/correction. 

Sun, 11/25/2012 - 23:05 | Link to Comment Orly
Orly's picture

European madness.  You called it.  The US equity markets are following the exact same topping pattern as the last crisis and it looks to be running out of room to change its mind.  The correction could take a violent turn here pretty soon.

But how is anyone to know what will truly happen when everything is thrown at a certain, unnamed currency pair to keep it afloat longer than seems possible?  One must admit that the trading patterns in Europe have been, shall we say, unnatural, especially lately.

I can't tell whether they are losing it yet or not but any correction, however delayed, will be more spectacular as time goes on.  The extremes in the possible resolutions of trading patterns iare what is really crazy.  A case could be made- and has in fact been made on different sites- that the EURUSD pair could be said to move to 1.32 or drop to 1.25.  That is a giant range.  So who knows?  Keep it close and tight and stay frustrated!

And YC, of course Gartley's are a tool in the quiver!  Just a tool, same as Fibonaccis and Bollinger bands.  My intuition follows along the lines of fundamental analysis, which has whip-sawed me more than I care to remember!  That's why I don't understand why the markets would take such trust in a potential Prime Minister to talk the yen down so easily when it is clear that he has very little power to do that himself- if he were elected!

I'm hanging in there anyway.  Enjoy your time back in Asia!

:D

___________

Oh and what I mean to say in regard to the AUDCAD H&S pattern is that it is nowhere near complete.  The trendlines confirm a possible top here and the character of the pair dictates that once the down leg gets going, it could go on a tear.  The same pattern has been in place since February 2012.  :D

 

Sun, 11/25/2012 - 21:01 | Link to Comment buzzsaw99
buzzsaw99's picture

:HEAVY MOUTH BREATHING:

Sun, 11/25/2012 - 21:26 | Link to Comment Yen Cross
Yen Cross's picture

 Minnesota State maps look fridged! Weather under ground MSP

Search Results Place Alerts Temp. Humidity Pressure Conditions Wind Updated Aitkin   23 °F 59% 30.00 in (Steady) Mostly Cloudy WNW at 4 mph 7:12 PM CST Save Albert Lea   27 °F 80% 30.04 in (Steady) Mostly Cloudy NNW at 6 mph 7:10 PM CST Save Alexandria   23 °F 68% 30.14 in (Rising) Overcast NNW at 15 mph 6:53 PM CST Save Appleton   28 °F 69% 30.09 in (Rising) Overcast North at 15 mph 7:13 PM CST Save Austin   27 °F 80% 30.04 in (Steady) Mostly Cloudy NNW at 6 mph 7:10 PM CST Save Baudette   10 °F 80% 30.14 in (Rising) Light Snow NNW at 13 mph 6:53 PM CST Save Bemidji   13.1 °F -999% 30.06 in (Falling) Light Snow SW at 4.0 mph 7:17 PM CST Save Benson   25 °F 69% 30.10 in (Rising) Overcast North at 10 mph 7:12 PM CST Save Bigfork   12 °F 73% 30.04 in (Steady) Overcast WNW at 5 mph 7:13 PM CST Save Brainerd   23.2 °F 73% 30.09 in (Falling) Mostly Cloudy Calm 7:17 PM CST Save Cambridge   29.2 °F 77% 30.00 in (Steady) Light Snow West at 5.4 mph 7:10 PM CST Save Cloquet 23 °F 63% 29.96 in (Rising) Overcast WNW at 9 mph 7:16 PM CST Save Cook   10 °F 79% 30.00 in (Rising) Overcast WNW at 7 mph 7:17 PM CST Save Crane Lake   12 °F 85% 30.02 in (Rising) Overcast NNW at 7 mph 7:05 PM CST Save Crookston   9 °F 79% 30.20 in (Rising) Scattered Clouds North at 14 mph

  Damn Buzz? 

Sun, 11/25/2012 - 21:32 | Link to Comment buzzsaw99
buzzsaw99's picture

http://www.wunderground.com/weather-forecast/US/AK/Barrow.html

Monday Overcast with snow showers. Fog early. High of 5F with a windchill as low as -24F. Breezy. Winds from the NNE at 15 to 20 mph with gusts to 30 mph. Chance of snow 20%.
Sun, 11/25/2012 - 21:37 | Link to Comment Yen Cross
Yen Cross's picture

 Sorry I missed 2/3 rds. of the Eskimoes.  Those crazy Alaskans!  (Temps)  Alaska, lol!  +1

Sun, 11/25/2012 - 23:31 | Link to Comment willwork4food
willwork4food's picture

Yea, buz, but it's a DRY cold right?

Congress should attempt to do something right and make it illegal for any state in the nation (excluding AK) to dip below 30F.

They might not make it work, but for the first time in their pathetic parasitic government lives they tried to do the right thing.

Sorry all you snow lovers, if you want snow, truck up to AK.

Sun, 11/25/2012 - 22:51 | Link to Comment max2205
Sun, 11/25/2012 - 23:51 | Link to Comment willwork4food
willwork4food's picture

Punishment for AJ's sacrilege. JFK...

..the audacity of some presidents.

Sun, 11/25/2012 - 22:58 | Link to Comment dragoneyes74
dragoneyes74's picture

You can't argue with these charts, but I have two caveats of how they could continue getting net longer if there's a F-cliff "kick the can" resolution:

1.  You can't forget the possibility of a Bernanke double-down in Dec or Jan.  That could provide the fuel for another leg up.  Money could move from bonds into stocks.    

2.  There's no other place for the big boys to go for a return and justify a loss, so the BTFD mentality should continue until there's a perception of tightening or the threat of sovereign defaults.    

The final central-bank-era-top may already be in, but I suspect it could happen in April or Sept of 13'.  

 

Mon, 11/26/2012 - 05:42 | Link to Comment falak pema
falak pema's picture

the only thing I can say is the world is heading more and more to the wall; in Eurozone, in Yen zone and in dollar zone. 

We are ALREADY in huge incoherence on all three fronts and 2013 will make it worse!

The EUro budget crisis, like the Euro greek crisis, two small pimples on the nose of financial oligarchy world are looking like they are not benign pimples; a tell tale sign as we kick the can on both into 2013. 

Today is a "cover up" day as the Euro group tries to find a face saving accord on Greece; what a fleece that is! 

Mon, 11/26/2012 - 05:54 | Link to Comment Orly
Orly's picture

But, falak, they will have miraculously found some change in the cushions of the sofa!  No one will have to get a haircut just yet.

Of course, it would be better for them to do it now and take the hit.  There will be some selling before the American taxes go up next year, taking the Euro down with it.  Maybe they should ride the wave and buy it back when the surf comes back in?

:D

Mon, 11/26/2012 - 06:17 | Link to Comment falak pema
falak pema's picture

yep Orly, we are into roller coaster bigtime.

I hope u didn't lose ur shirt shorting the Euro bear. 

As for changing the cushions on the couch I can understand that; more bounce for every ounce of Euro spiking! 

Whoopee! 

Tue, 11/27/2012 - 04:14 | Link to Comment iambear
iambear's picture

data resource?

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