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NYSE Short Interest Plunges To March 2012 Levels

Tyler Durden's picture





 

As if the already documented record $220 billion year end equity market injection courtesy of deposits (being used by bank prop arms to invest in risk assets) was not enough to send markets into nosebleed territory to start the new year, which fully explains the institutional (note: not retail) capital flood into equity funds and ETFs as has been trumpeted every day for the past week by CNBC (we will update the retail data from ICI today), here is yet another reason why the 2012 to 2013 transition has everything to do with trading technicals and nothing to do with fundamentals.

As the chart below shows, the reported level of NYSE short interest tumbled as of December 31, to 12.9 billion shares, a major 5% decline - the largest incidentally since December 30, 2011 - the lowest level since March, and a trend which has likely persisted as the shorts once again have thrown in the towel (except for Herbalife of course). Of course, this collapse in bearish sentiment, which goes hand in hand with the surge in NYSE margin debt to 5 years highs, is only sustainable if and only if the Fed has now fully eradicated all risk and all volatility in perpetuity. Which for now, judging by the epic ongoing smackdown in the VIX, is succeeding. That will change.

 


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Wed, 01/16/2013 - 12:28 | Link to Comment fuu
fuu's picture

A few question from the linked article , what is a "transaction account"?

Do IB's have "transaction accounts" with each other?

How many stock shares are held in IB/PD "transaction accounts"?

Wed, 01/16/2013 - 12:38 | Link to Comment TruthInSunshine
TruthInSunshine's picture

Equities (as well as bonds, neat trick that, Bernanke - for now) are essentially in circa-1999 batshit crazy territory again as a group, and many are more so, on an individual basis.

Who (other than a tied-in-with-TSY-&-Bernank "wizard" working for a TBTF entity that has no personal ballsack skin in the game while sitting in Bernanke's House of Ill Repute, Centrally Rigged Gambling & Debauchery-- I won't say Brothels or Casinos, as that would insult those much more noble institutions) would look at PCLN or CMG, CRM or AMZN and actually not be alarmed that there can't be anything but miles of space beneath those fiat'ed air baloons when the music stops?

Wed, 01/16/2013 - 12:43 | Link to Comment Say What Again
Say What Again's picture

AMZN has a PE of 3,364. 

Does anyone remember the last time we saw numbers like that?

Hint: "Tonight we're gonna party like its 1999."  And the party lasted into 2000.  The party was fun, but the hangover sure was a "BEAR."  (sorry about the bad pun).

Wed, 01/16/2013 - 12:53 | Link to Comment Ham-bone
Ham-bone's picture

A bear makes sense until you ask where people w/ money will go? 

Into cash?  With the Fed creating $85b monthly, that seems unwise.

Bonds?  1.8% 10 yr?

PM's?  Sure, some but it's just a hedge (unless you are a ZH'er...present company guilty)

RE?  The "cheap" panic phase is over and banks, Fed have put a floor under this...

So, where would one go but up, up, up in equities...hyperinflation maybe but still up.

No, this time it is different...for a while longer...until it isn't

Wed, 01/16/2013 - 12:55 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Indeed, and now we find out what the "price" of something noone wants to buy is as well as the "price" of something I refuse to sell.  The U.S.S.A is Russia circa 1989.  Gonna be fun.

Wed, 01/16/2013 - 13:18 | Link to Comment TruthInSunshine
TruthInSunshine's picture

Many people with money have lost trust forever with equity markets, having ben bitten 2, 3 or more times now (just like in the 20s & 30s).

They understand that equity markets, now even more than ever, are the most rigged parlor on the planet.

They'd rather earn nothing on fiat and just buy what they need or want (even if it's from a truncated list), than dive back in with the shylocks of Wall Street.

More of them have certainly learned more about the Ponzi-nomics practiced by central planning...errr, I mean central banking entities in the last 5 years than they have in all the previous years of their lives.

I say this as someone who talks to them regularly.

Wed, 01/16/2013 - 13:41 | Link to Comment Ham-bone
Ham-bone's picture

You are right...they know equities are rigged.  They know FX and currencies are rigged, bonds, RE, etc.  All rigged.  But what you miss is that they are simply following where the rigging is the strongest and most advantageous.  They know that if the Fed loses it, all of the asset classes (save maybe PM's) will blow...so dance while the music plays (and it is logical...partner with the biggest cheater and benefit...not my thing but certain logic to it).

Wed, 01/16/2013 - 14:15 | Link to Comment TruthInSunshine
TruthInSunshine's picture

Many of them know it is rigged but that even the "Bernanke Put" won't save them when it inevitably implodes (as it already has done so once under Bernank, and multiple times under the "Greenspan Put").

Did you ever witness days where stops were not only taken out, but taken out at a bid/ask spread that was about 75% lower than how most ASSume that these devices work?

I did. Many days like that....not that long ago.

Wed, 01/16/2013 - 15:12 | Link to Comment walküre
walküre's picture

GS reporting another bombastic record earning season in paper dollars. Anyone taking it serious anymore? If anything, their success in paper dollar terms is just another sign that paper is worth less and less. Perception is everything. Sure, their earnings and boni will allow them to live high off the hog on Wall Street a while longer BUT just as there is only air between hyperinflated stock prices and the true value of a company, there is only air between what the Shylocks are earning compared to what the broader population can afford (and can comprehend).

Banks and other financial players "earning" billions upon billions when at the same time the country is discussing the option to either default temporarily, raise the debt ceiling or cut spending massively because of one fucking gigantic paper debt bubble.

OUR debt is THEIR wealth. The imbalances are so obvious and disgusting, I really would not make any predictions about the next 10 years of this nation. It could all go down real quick and end up real bad once the elite has lost control over PERCEPTION and PROPAGANDA. When the paycheques for the military bounced or didn't cover enough to survive, the ex USSR military ran off and the elite had no more protection.

Keep stackin' everything that is tangible including cash. Don't trust banks or bankers, brokers or dealers. They are gambling with your deposits and when they fail, you are not getting what is rightfully yours. Their gains are someone else's loss. Always have been and that loser is typically YOU or ME.

Wed, 01/16/2013 - 15:49 | Link to Comment Freddie
Freddie's picture

Many still love Ob-MAO and voted for him. 

Wed, 01/16/2013 - 12:30 | Link to Comment Frastric
Frastric's picture

The meltdown is going to be spectacular when the Fed loses control...

Wed, 01/16/2013 - 12:40 | Link to Comment SmoothCoolSmoke
SmoothCoolSmoke's picture

If that is not for 20 years then the Fed wins.

Wed, 01/16/2013 - 13:29 | Link to Comment DeadFred
DeadFred's picture

20 years is a bad bet. All the new gains are institutional as this post points out. These aren't stupid retailers who will hold on until the bottom to sell.. They will all jump at once and test the breakers if things turn south. The Fed can't guarantee a road free of bumps from quakes, wars, assassinations and such so there will be a slump, the only question is when. 20 years is optimistic, I guess 20 days, but what do I know.

Wed, 01/16/2013 - 12:32 | Link to Comment Cursive
Cursive's picture

Dow may go to 36,000 first, but when it does finally catch up with reality ala Wiley E. Coyote off the cliff, the crash will be spectacular.  Don't go walking around the Manhattan financial district without a canopied walkway.

Wed, 01/16/2013 - 12:32 | Link to Comment disabledvet
disabledvet's picture

Loss of short interest is bad...but if retail starts to pile in look for the pros to bail and establish new longs. (Goldman earnings for example.) I'll be looking for product on the shelves (Home Depot/Lowes) and "proceed accordingly/accordionly.

Wed, 01/16/2013 - 12:44 | Link to Comment TruthInSunshine
TruthInSunshine's picture

Retail "piling in" doesn't mark the top any longer at a time when central planners are playing Jenga with infinite stacks of unobtanium blocks.

Wed, 01/16/2013 - 15:57 | Link to Comment mind_imminst
mind_imminst's picture

Bingo!! People are not getting long because of fundamentals. People are not shorting the market because the FED will no longer allow bear markets (in nominal dollar terms). The last couple of years have shown that the FED will do everything in its power to prop up the market. Downturns will be brief. Buy the dips.

Wed, 01/16/2013 - 12:35 | Link to Comment AynRandFan
AynRandFan's picture

VIX hit 13.21 a few minutes ago.  Last time it hit this level was June 4, 2007.

Now, THAT's interesting!

Wed, 01/16/2013 - 12:48 | Link to Comment drivenZ
drivenZ's picture

gotta look at the futures curve. Spot VIX doesn't mean much. I bet it's pretty steep. 

Wed, 01/16/2013 - 12:36 | Link to Comment Dollar Bill Hiccup
Dollar Bill Hiccup's picture

Oh yee of little faith.

Volatility, get thee hence !

Manipulated markets are forever.

Just as New York pols can squat over the Constitution and take #$@! behind closed door sessions. And vote at midnight. With no public scrutiny. And simply make sh-t up as they go. The great divider needs to pay off the 2% for tax hikes. And vol shall continue into the abyss.

AND NOW, BACK TO OUR REGULARLY SCHEDULED PROGRAM, THE ADVENTURES OF FRANZ KAKFA.

Wed, 01/16/2013 - 12:39 | Link to Comment SheepDog-One
SheepDog-One's picture

Markets may be manipulated forever, but always remember the only reason for a pump is the following dump, no 2 ways about it.

Wed, 01/16/2013 - 12:44 | Link to Comment TruthInSunshine
TruthInSunshine's picture

There can be no bountiful Harvest without mass cullings, and in a wash, rinse & repeat endless loop, at that.

Long Dutch East India Company (Vereenigde Oost-Indische Compagnie, VOC)...

Wed, 01/16/2013 - 12:48 | Link to Comment Dollar Bill Hiccup
Dollar Bill Hiccup's picture

The repetition provides interesting food for thought, yet as we go through it again, it still remains difficult to fathom.

So apparent, so wrong, yet so actual.Or as the old joke goes, "Denial is not a river in Egypt."

Wed, 01/16/2013 - 12:39 | Link to Comment SheepDog-One
SheepDog-One's picture

Indexes within a few% of all time bubble-top highs....all-clear for retail to pile in once again! :D

Wed, 01/16/2013 - 12:45 | Link to Comment SmoothCoolSmoke
SmoothCoolSmoke's picture

If this is "like 1999" (stocks are insane!), the SP was at 1177 1/1/99.  Finally topped out at 1570 or so.  Retail that "piled in" 1/1/99 were very, very happy they did.  Why is today any different? 

Wed, 01/16/2013 - 13:32 | Link to Comment michiganmaven
michiganmaven's picture

Problem with your anaology is you assume that 2013 is 1999... I would argue 2009 was 1999 with the first bat of QE and instead of pulling a greenspan and taking the cool aid away (he hiked rates) the Fed TRIED once or twice (expiration of QE1 and 2) but the Fed is just too scared and then lept right back in.. so I would say this year is more like Late 1999 or early 2000.... right near the "oh crap" phase of earnings and growth... just look at the last few days. China survey was WAY down on confidence and lending, World Bank slashed growth by 20%, EU crying about the euro (which if they weaken it that would directly slam US earnings).... so yes it is very much like late 1999 when everyone had their head in teh sky and firmly right up their ass with no sense of the pending issues globally... it was all about tech then.. just like free money now... both end. 

Wed, 01/16/2013 - 12:37 | Link to Comment AccreditedEYE
AccreditedEYE's picture

Shoot... I gotta go buy more dip. Be right back...

Wed, 01/16/2013 - 12:47 | Link to Comment q99x2
q99x2's picture

When will that change?

If the FED has a software program with infinite counterfeited money why would that change? As long as they can buy at the same rate of sales. They would end up holding all of it at their cost and that would be the value that it would be worth until someone else decides they would like to buy a share. Then the market would move up.

Wed, 01/16/2013 - 12:47 | Link to Comment helping_friendl...
helping_friendly_book's picture

This is killing me.

Who wouldn't short, as a matter of principle, this market?

I don't get it???? I would take the money and run if I were long. Who is crazy enough to keep their money in this market?

Is this going to continue until Bernanke steps down and the bad cop begins his/her reign as ChairSatan?

There are , way, to many structual fiscal defects to support this rehypothication. The Banks must be levered 80:1?

Wed, 01/16/2013 - 13:00 | Link to Comment SillySalesmanQu...
SillySalesmanQuestion's picture

Must sell my Dutch tulip bulb and Apple shorts now....!

Wed, 01/16/2013 - 13:06 | Link to Comment mayhem
mayhem's picture

boooooyah... waters warm, come on in

Wed, 01/16/2013 - 13:35 | Link to Comment electricgorilla
electricgorilla's picture

When the S&P 500 hit 666, that was the sign that the elite have there hands in full control over this market. It's not what Ben Bernanke wants, it what his handlers want. Usually you sucker in retail money for years with some "un-reality" hype like the tech or housing boom. This time things are more dier as these elite have sent out there sentinal, Bernanke, to perpuate the "un-reality" hype. Why not buy a few call options on the vixy for like $800 spread out for 2013. If they don't work, you p/l for the year is a L of 800. If they do then you probably can make 500k.

Wed, 01/16/2013 - 13:39 | Link to Comment StoleYourMoney
StoleYourMoney's picture

Oh, you didn't know? Stocks only go up.

Wed, 01/16/2013 - 15:13 | Link to Comment yogibear
yogibear's picture

And stock are cheap. Come on in.

Wed, 01/16/2013 - 15:18 | Link to Comment DowTheorist
DowTheorist's picture

The primary trend of the market is clearly bullish (even too bullish). NYSE short interest and excess bullishness in the charts suggest that an intermediate top may be near. However, given the technical bullishness of the market, the most likely outcome is merely a correction, not a full-fledged bear market. More on the technical make-up of the market here:

http://www.dowtheoryinvestment.com/2013/01/dow-theory-special-issue-asse...

 

 

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