Short Squeeze Hits Escape Velocity

Tyler Durden's picture


The 'most shorted' names in the Russell 3000 are up a remarkable 1.4% today compared to 0.45% in the index itself. The short-squeeze off the NFP gap-down lows is impressive indeed. From the open last Friday, the 'most short' names are up 6.6% against the index up only 3.5% as the dash for trash continues in the face of increasingly dismal data. The last 2 times that the 'most short' index was this squeezed relative to the index was late-December (before the equity dip) and mid-Fed (before the equity dip). Just as we warned here and here, the inexorable flow of easy money means the dash-for-trash (as remarkably ridiculous as it seems - though as now know nothing is allowed to fail ever again) has been the winning trade; though as we note below, there is a limit to the 'squeezability' and we appear to be there in the short term.


The 'most short' names have been smashed higher in the last few days with Tuesday and today being more epic squeezes...


and the last two times the squeeze got this wide...


But it is remarkable that this rally has provided a 30% rally off the November lows among the most-shorted names - almost double the performance of the index itself...

Finally, for those who missed it the first time around in February (since when the basket has returned well over 10%), here again are the most shorted Russell 2000 stocks: 


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Thu, 04/11/2013 - 12:47 | 3437006 Sudden Debt
Sudden Debt's picture

with 85 billion a month, forcing a short squeeze on the Rebllions is easy...

Thu, 04/11/2013 - 12:50 | 3437023 Hangfire
Thu, 04/11/2013 - 12:54 | 3437053 flacon
flacon's picture

So what are you saying? IWM puts? Now? 

Thu, 04/11/2013 - 15:23 | 3437738 Manthong
Manthong's picture

Huh?  People are shorting  Ruger?

Thu, 04/11/2013 - 19:08 | 3438722 Crash Overide
Crash Overide's picture

"Huh?  People are shorting  Ruger?"


Right...? My thoughts exactly. It's not like anything makes sense anymore so...

Thu, 04/11/2013 - 12:55 | 3437057 Sudden Debt
Sudden Debt's picture

welll... as I'm a pretty modern guy... all I can say....

I sure hope this will become a mayor trend....
naked friday boob day or something...

Thu, 04/11/2013 - 12:57 | 3437069 flacon
flacon's picture

What about M-oobs? Man boobs? The slogan could be: "Hairy can be sexy!"

Thu, 04/11/2013 - 12:59 | 3437075 Sudden Debt
Sudden Debt's picture

I don't mind!!
They'll work like caddle drivers steering the nice boobed woman my way!!!

Thu, 04/11/2013 - 15:07 | 3437663 smlbizman
smlbizman's picture

...and russell short is one of the most successful australian paralympian atheletes of all time...

Thu, 04/11/2013 - 13:16 | 3437157 The Heart
The Heart's picture

Try to imagine that kind of protest in California, the land of silicone.

Thu, 04/11/2013 - 12:45 | 3437009 The Dancer
The Dancer's picture

Goldman recommends to sell the 10year and Gross is buyijng the 10yr...who is going to win this round?

Thu, 04/11/2013 - 12:57 | 3437058 flacon
flacon's picture

When it gets serious you have to lie.

Thu, 04/11/2013 - 12:57 | 3437062 q99x2
q99x2's picture

I think they work for the same people.

Thu, 04/11/2013 - 13:03 | 3437084 TruthHunter
TruthHunter's picture

"Goldman recommends to sell the 10year and Gross is buying the 10yr..."

Isn't that more like Goldman recommends that you buy "OUR 10yr" and Gross SAYS he's buying the 10 yr?


Thu, 04/11/2013 - 13:01 | 3437088 Sudden Debt
Sudden Debt's picture

the one being paid the fees.

Thu, 04/11/2013 - 12:49 | 3437017 pods
pods's picture

There certainly is a squeezability limit when attempting a "short squeeze."


Thu, 04/11/2013 - 12:52 | 3437031 Cognitive Dissonance
Cognitive Dissonance's picture

"Go ahead and squeeze the Charmin fiat. We'll print moar." - Kuroda/Bernanke

Thu, 04/11/2013 - 12:50 | 3437021 Cognitive Dissonance
Cognitive Dissonance's picture

It seems the North Koreans aren't the only ones putting things into orbit.

<We have liftoff.....liftoff of Space Ship Abe/Kuroda-Bernanke.>

Thu, 04/11/2013 - 12:50 | 3437026 Dagny Taggart
Dagny Taggart's picture

Locate your floatation device. Slowly in an orderly fashion start making your way to the lifeboats. Choose a reliable swimming buddy.

Thu, 04/11/2013 - 13:04 | 3437094 Smuckers
Smuckers's picture

Preferably one with a small bleeding cut on their leg.

Thu, 04/11/2013 - 12:50 | 3437029 RougeUnderwriter
RougeUnderwriter's picture

But what are the insiders doing

Thu, 04/11/2013 - 13:03 | 3437097 AlaricBalth
AlaricBalth's picture

Last week insiders bought $90.2 Million and sold $1.05 Billion in stock. Sell/Buy ratio is 11.69.

Thu, 04/11/2013 - 12:51 | 3437035 spinone
spinone's picture

Rule #1, don't short unlimited liquidity printing

Thu, 04/11/2013 - 12:53 | 3437040 spinone
spinone's picture

But whos gonna buy on the way down if the shorts are all dead and buried?

Thu, 04/11/2013 - 13:00 | 3437076 The Abstraction...
The Abstraction of Justice's picture

Not directed at you spinone, but perhaps the Zero Herders Sheeple should all short Bitcoin, since they all profess to know exactly where the peaks and troughs will come.

Thu, 04/11/2013 - 13:05 | 3437098 spinone
spinone's picture

I'm not shorting nothing

Thu, 04/11/2013 - 15:04 | 3437656 roonbox
roonbox's picture

Does that mean you are or you arent?

Thu, 04/11/2013 - 12:55 | 3437051 The Dancer
The Dancer's picture

well, I shorted stocks on today's rally...just to show how hard-headed I can

Thu, 04/11/2013 - 13:34 | 3437232 eclectic syncretist
eclectic syncretist's picture

S&P ~1600 will be a key point, if you go in for watching the tape.  Not only is it a nice round number, it also marks the line of resistance defined by the previous two market tops in 2000 and 2007.

I would guess it'll get hit, get eclipsed, fall back through, hit again, churn relatively heavily, and then move on, more likely down than up.  I'm not going to bet on it though.  There are better bets to be had.

Thu, 04/11/2013 - 12:59 | 3437082 Oldwood
Oldwood's picture

The easier the money, the riskier the bets. Just talking to a friend of mine this morning about how neither of us has ever been attracted to gambling or casinos. As we both own small businesses we are forced to gamble everyday, and usually the payoffs are small but the risks are large. Our money is very precious to us as we have had to earn and accumilate it very slowly so there isn't much temptation to throw it down on the table in large chunks, especially in someone else's casino where we know the game is rigged against us. The only thing I can imagine is that either these people are gambling with easy money or someone else's money, to be willing to take these risks.

Thu, 04/11/2013 - 13:06 | 3437087 q99x2
q99x2's picture

If a correction ever ocurrs, there are circuit breakers in place that will give people time to cool off so that when the markets reopen transactions will occur in an orderly fashion. Transactions will ocurr in an orderly fashion. Transactions will ocurr in an orderly fashion.

Thu, 04/11/2013 - 13:03 | 3437089 The Dancer
The Dancer's picture

Keep bets small!

Thu, 04/11/2013 - 13:03 | 3437095 gjp
gjp's picture

It isn't just the small ones.  Big-cap tech names like AMZN, FB, LNKD getting bid in the same way, showing pretty tight correlation with the graph of the Russell most shorted.  These companies don't need the Fed backstop to save a failing business model, they are self-sustaining for now (maybe not AMZN), so the Fed backstop is simply to support triple-digit PEs?  The farce marches on ...

Thu, 04/11/2013 - 13:04 | 3437103 resurger
resurger's picture

So its FUCK ON!

Thu, 04/11/2013 - 13:05 | 3437106 Law97
Law97's picture

The hedgies in particular have been shorting the living crap out of this rally.   A major hedge fund blowup has to be imminent.

Thu, 04/11/2013 - 13:11 | 3437135 vote_libertaria...
vote_libertarian_party's picture

Black Rock was bitching about QE on Monday...just saying.

Thu, 04/11/2013 - 13:13 | 3437117 scatterbrains
scatterbrains's picture

This all smells like a top to me and keep in mind (on a closing basis we have not escaped above the line that projects across the tops of the previous decades YET).   One possible down side target using XOM's chart suggests we could see 108 or 1080ish in a hurry if XOM breaks down with SPY snapping back to it's long term correlation to XOM.. big if I know.

Thu, 04/11/2013 - 13:09 | 3437119 NEOSERF
NEOSERF's picture

At what point do we just turn the NYSE off and simply allow all holders of stock a 0.5% gain every day.  Would eliminate all the noise and tying to Fed actions.  Just give everyone a nice gain every day perhaps based on a couple Lotto balls with numbers from 0.1% to 2%.  We could televise them every night and people would feel richer tomorrow on their way to Best Buy.

Thu, 04/11/2013 - 13:12 | 3437129 Godisanhftbot
Godisanhftbot's picture

 Maybe the shorts are just ....................dumber than average?


 Like a bitcoin long at 260 , who am dumber than spit

Thu, 04/11/2013 - 13:16 | 3437151 Yen Cross
Yen Cross's picture

     Chain store sales miss,and last years miss is revised higher and the markets blow it off.


  USD     Chain Store Sales (YoY) 1.6%   1.7%
Thu, 04/11/2013 - 13:16 | 3437159 Oldwood
Oldwood's picture


Russian roulette is the only game in town. Increasingly the opportunities to earn a living outside of the "Games of Chance" industry are quickly fading away. A significant portion of our economy is based on people taking a gun loaded with a single bullet, placing it in their mouth and pulling the trigger. The payoff, if you still have a head, can be huge. And even if you are not the one with the gun in your mouth and find yourself in a supporting role providing ammo, cleanup services, or just general managerial and accounting services to the more daring elements, you are highly dependent upon someone, anyone, putting the gun in their mouth. As time goes by most of us will have no choice but to put the barrel in our mouth as options become more limited and the payouts grow steadily smaller. But what options do we have at that point? Possibly turning the weapon on someone else? That is what is happening at the higher level of these games. Those who have been used to putting the gun in their mouth are now aiming it at those who would prefer to sit it out. The Fed and the stock market are pushing the gun across the table towards me, whispering that this may be my last chance. "pick it up" they are saying…..or else.

Thu, 04/11/2013 - 13:20 | 3437175 CDNX fan
CDNX fan's picture

NEVER underestimate the replacement value of equities within an inflationary spiral...


Thu, 04/11/2013 - 13:26 | 3437203 The Dancer
The Dancer's picture

As Mr. Einstein said," It's all relative!" me, I'm not greedy. I just want a small short position to help me enjoy my retirement. So, after big rallies, I sometimes take a small short position to test the waters. When I am proven wrong, I step aside so as not to be run over in the stampede of exuberance. Stay humble.....

Thu, 04/11/2013 - 13:27 | 3437207 Notarocketscientist
Notarocketscientist's picture

I really am getting to the point that i can no longer watch any MSM.   I turn on bloomberg as some 'expert' is saying the dow can go much higher - and it's not only because of QE - it's because fundamentals are good - corporate profits are strong.

Duh - why does this MOF think profits are strong strong????

But nobody asks this fucking retard the obvious question:


Thu, 04/11/2013 - 13:39 | 3437245 khakuda
khakuda's picture

That is exactly the behavior that the Fed wants.  Force the market higher via currency debasement until the idiot, zero value added "experts" go on CNBC to tell everyone that the market is going a lot higher and it's safe to get back in the water only to burn them once again.  Same "experts" that were emphasizing caution in 2009 are pounding the table to buy now.

As long as the Fed is running the show, expect this pattern to continue to repeat in the future, destroying the finances of the most vulnerable that can afford it least.

Thu, 04/11/2013 - 13:30 | 3437219 sdmjake
sdmjake's picture

A hearty 'ThankYou' to all the dummies still shorting RGR...

Thu, 04/11/2013 - 14:10 | 3437397 MichiganMilitiaMan
MichiganMilitiaMan's picture

Short squeeze?  I'd call it a testicle squeeze!

Thu, 04/11/2013 - 14:15 | 3437441 pragmatic hobo
pragmatic hobo's picture

thing is, ... it's always so much easier to call bottom than it is to call top ...

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