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And The Squeeeze Goes On...

Tyler Durden's picture




 

In the last five days, the 'most-shorted' names in the Russell 2000 index have surged over 7.3% from their lows. During the same period, the index itself has managed a still-impressive 2.4% gain. The epic triple-beta dash-for-trash continues to rage and tear the faces off every short who dare use reasonable valuation (macro- and micro-) perspectives to make investment decisions. When will it end?

Another day, another short-squeeze...

 

But the last 5 days have been remarkable...

 

and since the start of the year, it seems the squeezes have a limit...

 

Charts:Bloomberg

 

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Mon, 04/29/2013 - 10:31 | 3509851 zorba THE GREEK
zorba THE GREEK's picture

"When will it end?"

When the house of cards comes crashing down and gold goes to 4-digits, that's when.

Mon, 04/29/2013 - 10:35 | 3509859 Bearwagon
Bearwagon's picture

That could be soon!

Mon, 04/29/2013 - 10:53 | 3509958 Sudden Debt
Sudden Debt's picture

depends what he means with gold....

paper gold to 0.001$ is also 4 digits

Mon, 04/29/2013 - 10:59 | 3510019 Jekyll_n_Hyde_Island
Jekyll_n_Hyde_Island's picture

It's obvious the Jews are somehow behind these highly profitable shorting oscillations ... [insert far-fetched and juvenile science fiction plot].

 

  Dan Brown!  Where are you Dan Brown?

Mon, 04/29/2013 - 11:05 | 3510048 otto skorzeny
otto skorzeny's picture

derp-dipshit JDL troll-derp.

Mon, 04/29/2013 - 11:13 | 3510074 fourchan
fourchan's picture

most shorted = most affected by the feds devaluation bubble.

Mon, 04/29/2013 - 11:16 | 3510087 Oracle of Kypseli
Oracle of Kypseli's picture

If all of us buy physical gold and silver, we can bring the end closer.

 

Mon, 04/29/2013 - 12:28 | 3510365 Jekyll_n_Hyde_Island
Jekyll_n_Hyde_Island's picture

Keep that bag on your head, Chechan-drone and keep up the good work.

Mon, 04/29/2013 - 13:37 | 3510563 otto skorzeny
otto skorzeny's picture

what the fuck does that even mean-shithead?

Mon, 04/29/2013 - 10:37 | 3509866 spankthebernank
spankthebernank's picture

There is a 13 year triple top in the mix this week....interesting

Mon, 04/29/2013 - 10:39 | 3509892 espirit
espirit's picture

Moar Matrix Metrics!

Mon, 04/29/2013 - 10:35 | 3509872 TheSilverJournal
TheSilverJournal's picture

Not saying it won't work for short periods, but betting that anything will fall in value faster than the dollar is a scary proposition.

Mon, 04/29/2013 - 10:36 | 3509878 zorba THE GREEK
zorba THE GREEK's picture

Make that 5-digits.

Mon, 04/29/2013 - 10:44 | 3509918 Frastric
Frastric's picture

zorba THE GREEK don't you mean;

When the house of cards comes crashing down and gold goes to 5-digits, that's when.

There fixed it for you.

Mon, 04/29/2013 - 14:08 | 3510638 mind_imminst
mind_imminst's picture

When will it end? When we are all pushing around wheel-barrows full of cash....well....in today's world, perhaps this ends in "zeroes" (instead of wheel barrrows) as in your digital fiat account at the local bank has so many zeroes that you can't keep track of how much "money" you have. Was that 100 billion, or one trillion?

Mon, 04/29/2013 - 10:37 | 3509853 slaughterer
slaughterer's picture

We will start shorting ES at 1600 with a stop at 1630.  It seems pretty obvious the index cowboys want  ES to test 1600 before the SHTF.

 

Mon, 04/29/2013 - 10:35 | 3509865 Cognitive Dissonance
Cognitive Dissonance's picture

Feed me Seymore!

<What do you want me to do? Slit my wrists?>

Mon, 04/29/2013 - 10:37 | 3509868 firstdivision
firstdivision's picture

Seriously, haven't people learned their lesson over the past few years?  You don't short this shit show.  It's too manipulated to the upside.  Just sit back and watch.

Mon, 04/29/2013 - 10:42 | 3509897 Lost Wages
Lost Wages's picture

How will we know when to short?

Mon, 04/29/2013 - 10:45 | 3509907 otto skorzeny
otto skorzeny's picture

it will be over in the blink of an eye

Mon, 04/29/2013 - 10:57 | 3510010 firstdivision
firstdivision's picture

Buy Vol with straddles.

Mon, 04/29/2013 - 11:18 | 3510111 Market Rage
Market Rage's picture

When you're convinced it's time to chase the market higher.  It's hard to short into a market like this, but it will be even harder to short the hole.

Mon, 04/29/2013 - 10:35 | 3509871 polo007
polo007's picture

According to Citi Research:

http://fs1.hidemyass.com/download/pzqe9/kvb8fu04dl9l7dttmvl2j0ab30

Too much money, not enough assets to buy

Inside the global supply-demand imbalance

- "It's the liquidity, stupid!" – The importance of unconventional policies for markets may be widely accepted by now, but we reckon the mechanisms remain poorly understood. Examining the supply-demand imbalance, largely created by central banks, provides important insights on prospects for market performance in 2013 in our view.

- "I have to buy" – The conventional argument for the link between QE and asset prices goes through the demand side: lower yields force investors to take ever increasing amounts of risk.

- "But what can I buy?" – However, we think the supply-side effect of QE is widely underestimated. Over the last three years, central banks globally have suppressed the natural growth in outstanding volume of securities available for investors to buy to the tune of several trillion dollars per year.

- A monumental squeeze – The result has been an extremely well correlated squeeze across risk assets as the liquidity has disseminated globally. For instance, the mere anticipation of the Bank of Japan's expansion of QE has coincided with, if not triggered, a strong rally in high-beta credit instruments in Europe.

- Will 2013 be any different? – Our forecasts for supply and central bank interventions suggests the supply-demand imbalance will remain as acute as ever over the coming quarters. That said, market resilience will face what may well be the biggest test of the year, if and when the Fed starts to taper off QE in the fourth quarter.

Mon, 04/29/2013 - 10:38 | 3509885 LawsofPhysics
LawsofPhysics's picture

Simply put, lots of paper promises and too little real collateral/assets.  "Mark to fantasy" forever, fuck you Bernanke!

Mon, 04/29/2013 - 13:17 | 3510512 Panafrican Funk...
Panafrican Funktron Robot's picture

"if and when the Fed starts to taper off QE in the fourth quarter"

It's pretty obvious that they can't drop QE from it's current 85 bln/month.  They probably can't even slow the pace of increase in QE (I'm thinking we see $100 bln/month by 4Q).

Mon, 04/29/2013 - 10:35 | 3509873 SheepDog-One
SheepDog-One's picture

I believe the Fed itself is the 'mysterious teflon short' who keeps losing day after day to drive the markets higher and never pulls his money off the table but just keeps adding moar. It's the only thing that makes any possible sense to me.

So the in other words, WE are 'the mysterious short', and will lose even more in the coming days how ever many of those are left.

Mon, 04/29/2013 - 10:38 | 3509875 Glass Seagull
Glass Seagull's picture

They sure showed capitalism - didn't they?

Mon, 04/29/2013 - 10:38 | 3509876 NoDebt
NoDebt's picture

Ladies and gentlemen, we have achieved cruising altitude and the Captain has turned off the seatbelt sign.  You are free to move about the cabin.  We expect a smooth flight all the way to our destination but we're usually proven wrong shortly after we say that.  So if you're smart you'll stay seated with your belt on.

Stewardess?  I'll have a double scotch, please to wash down my Dramamine.

 

Mon, 04/29/2013 - 10:51 | 3509968 fonzannoon
fonzannoon's picture

No debt was that you that put up the link between recourse loans and non recourse loans? Thanks for putting that up. That was relly interesting.

I spend the weekend at home depot. The place was packed. I went out to dinner, the restaurant was packed. It's just my guess but I think everyone is living the good life on credit now thanks to zirp and when the credit card bubble starts to burst the CC companies will offer to "modify" everyone's debt with similar non recourse provisions that no one notices.

Mon, 04/29/2013 - 11:14 | 3510090 Theta_Burn
Theta_Burn's picture

I spent the weekend at Lowes (i fucking hate Lowes, but its close) decent crowd..

Also went to dinner, and you guessed it, packed. central Jersey at least in my area seems like its humming along.

We pogues don't get the advantage of zirp, explain my circumstance then.. discover member since late 80's never late w/ payment and my interest is 19%?

Cash is king

Mon, 04/29/2013 - 11:33 | 3510158 centerline
centerline's picture

Money is cheap right now.  My take is you have a decent number of folks who just stopped payment on certain things and have yet to really feel the sting (particularly with primary mortgages).  Many others are just making the minimum payments.  No real effort to attack principle.  Trying to maintain a lifestyle instead.  Moral hazard is a bitch for sure.  One good wave of deflation would be seriously ugly.

Mon, 04/29/2013 - 10:37 | 3509880 jubber
jubber's picture

This bloody POMO just drags all the European Indexes up as well day after day, nearly every morning they try to sell off...sigh

Mon, 04/29/2013 - 10:43 | 3509881 slaughterer
slaughterer's picture

AAPL/GOOG/MSFT bull madness will be used to propel indices and index-linked ETFs to newer MOAR highs.   Yield crazed conservative investors will pile into HYG and JNK as they make all time highs.   FOMC will be pessmistic abotu recent downswing and keep the liquidity spigots wide open.  Succession plans for Bernanke will involve spec about Yellen or Dudley (more liquidity).  

Mon, 04/29/2013 - 13:20 | 3510518 Panafrican Funk...
Panafrican Funktron Robot's picture

"Yield crazed conservative investors will pile into HYG and JNK as they make all time highs."

Note the logical disconnect.

Mon, 04/29/2013 - 10:37 | 3509884 maskone909
maskone909's picture

Everyone is terrified of deflation. But lets think about this for a sec.
With deflation, speculators will not buy because they think they might get shit for cheaper prices in the future.

What they dont tell you is that people will buy what they need, and always will. They will get these goods at cheaper prices. This is great for consumers. Dispell this evil deflation myth

Mon, 04/29/2013 - 10:43 | 3509895 LawsofPhysics
LawsofPhysics's picture

"They will get these goods at cheaper prices." -  Only if the good in question is available, but yers the whole "flation" terminology is a trap set but progressive eCONomists trying to change the language on you and to divert attention away from devaluation and lost of purchasing power in your wages.  hedge accordingly.

Mon, 04/29/2013 - 10:43 | 3509910 maskone909
maskone909's picture

Demand at the consumer level will never leave. Opposite of an inflationary environment.

Mon, 04/29/2013 - 11:14 | 3510078 centerline
centerline's picture

For most people, income drops faster than prices.  Massive deflation will leave most people begging for massive inflation.  Couple this with rising commodity prices and the stage has been set for max pain.

Mon, 04/29/2013 - 13:12 | 3510508 LawsofPhysics
LawsofPhysics's picture

no shit sherlock, but just because their is more demand for food/fuel it does not mean that it will always be available.  Moreover, wages are also dropping douchebag, dropping faster than prices for things that you need to survive (who gives a shit about useless crap).

Mon, 04/29/2013 - 10:39 | 3509888 observer007
observer007's picture

ABN Commodity Outlook: Gold 1000, Silver 20

 

Dutch Bank ABN Amro predicts metalls crash.

"Our view is that the global economic recovery will continue and that fears over the slowdown in China are overdone. Although we expect most commodities will fall for the remainder of the year, base metal prices will rise in the near term as demand increases - led by China and the US,"

http://homment.com/abn-commodity-outlook

Mon, 04/29/2013 - 10:40 | 3509900 maskone909
maskone909's picture

Will cost of production fall? If not, producers are fucked.
Short the miners, buy pms.

Mon, 04/29/2013 - 10:43 | 3509915 Groundhog Day
Groundhog Day's picture

could it be that they have no gold availabe for delivery?  hhmmm  sounds of desperation.  Come to 1000 and see what happens.  People will buy so much and ask for delivery that it will put them out of business.  Be careful what you wish for

Mon, 04/29/2013 - 10:47 | 3509921 fonzannoon
fonzannoon's picture

So the same bank that had to default and settle in cash sees a metals crash. Did they end it with "so please stop asking for delivery!!!!"

Speaking of which, if JPM's vault does not go to zero today, do we assume that it's because everyone walked up to the line and did not cross it? Or JPM had to start settling in cash as well?

Mon, 04/29/2013 - 10:45 | 3509929 IridiumRebel
IridiumRebel's picture

"Our view is that the global economic recovery will continue and that fears over the slowdown in China are overdone." This is bullshit. they drop it to 1000 and you will literally see no physical metals available.

Mon, 04/29/2013 - 11:05 | 3510035 css1971
css1971's picture

Doesn't make any sense. it implies a gold/silver ratio of 50 which would require the economy to strengthen significantly (increased silver consumption) to bring the ratio down.

Mon, 04/29/2013 - 10:39 | 3509889 ebworthen
ebworthen's picture

The HFT algos will be three seconds ahead of everyone else.

Mon, 04/29/2013 - 10:42 | 3509893 williambanzai7
williambanzai7's picture

INTERESTING CHART

Mon, 04/29/2013 - 10:43 | 3509914 IridiumRebel
IridiumRebel's picture

i hated the goddamned paper clip! Bastard would pop up when you were typing......

Mon, 04/29/2013 - 10:47 | 3509917 Ralph Spoilsport
Ralph Spoilsport's picture

Clippy, you're our only hope!

Mon, 04/29/2013 - 10:53 | 3509959 williambanzai7
williambanzai7's picture

Clippy will stop the big bad Algos!

Mon, 04/29/2013 - 10:46 | 3509930 ebworthen
Mon, 04/29/2013 - 10:55 | 3510003 Ralph Spoilsport
Ralph Spoilsport's picture

Sounds like Gilbert Gotffried as Clippy.

Mon, 04/29/2013 - 12:28 | 3510370 ebworthen
ebworthen's picture

You got it!

Don't miss part 2 and part 3 linked on the YouTube page.

I hope someone got an award of some kind for those, funny stuff.

Mon, 04/29/2013 - 10:39 | 3509896 Village Smithy
Village Smithy's picture

After money printing, reducing the number of serious short players in the market is the Feds' number 2 policy tool. Someday we will see this on paper but for now just look at the evidence that has accumulated over the last 5 years. Selling (either short or to exit a position) is the only thing that reduces values. Eliminate as much of that propensity as possible and you have gone a long way towards supporting equity values, the obvious number one policy goal of the Fed. (After seeing this mornings' print it sure as hell isn't income growth).

Mon, 04/29/2013 - 10:40 | 3509898 NeedleDickTheBu...
NeedleDickTheBugFucker's picture

I'm eagerly waiting for the launch of the 3x Most Shorted Russell 3000 ETF.

Mon, 04/29/2013 - 10:44 | 3509901 LoneStarHog
LoneStarHog's picture

Screw the SHORTS...Screw the LONGS...Screw EVERYONE who is STUPID enough to be in these SO-CALLED MARKETS!

Mon, 04/29/2013 - 10:44 | 3509902 DavidC
DavidC's picture

I'm more interested in why the NASDAQ is up well over 1% today.

DavidC

Mon, 04/29/2013 - 11:08 | 3510049 NeedleDickTheBu...
NeedleDickTheBugFucker's picture

Monday, sunny somewhere, R in the month.

Mon, 04/29/2013 - 10:42 | 3509904 Antifederalist
Antifederalist's picture

Tylers:

Source?  Anyway of getting a list of the names in the "most shorted category"????

Inquiring minds......

Mon, 04/29/2013 - 10:55 | 3510005 slaughterer
slaughterer's picture

First Solar

JC Penney

Netflix

the usual shit stocks.

Mon, 04/29/2013 - 10:44 | 3509905 IridiumRebel
IridiumRebel's picture

They are just ramping it and on May 1 they will pull the rug out. 

Mon, 04/29/2013 - 10:45 | 3509908 Dollar Bill Hiccup
Dollar Bill Hiccup's picture

Buy stocks, buy bonds, buy everything,  Messianic Finance is here !

Mon, 04/29/2013 - 10:43 | 3509913 slaughterer
slaughterer's picture

WOW, Dallas Fed completely sucked shit.  We are sure to cross ES 1600 maybe even today!

Mon, 04/29/2013 - 11:25 | 3510138 dcb
dcb's picture

for me today was the really bad day for the squeeze.

on 4/11/13 we hit my usual top signal

Mon, 04/29/2013 - 11:29 | 3510142 Mike Cowan
Mike Cowan's picture

Relax Zero Hedge.

Mon, 04/29/2013 - 11:47 | 3510215 polo007
polo007's picture

According to Morgan Stanley:

http://fs1.hidemyass.com/download/YYNB3/s46g57028081978abtre3h2ou0

Why Did the Fed Choose a 6.5% Threshold?

We found intriguing the suggestion by Chairman Bernanke that the Fed could – should the current thresholds not be sufficient – “lower even further” the threshold for the unemployment rate. The Chairman alluded to this ability after making reference to the Fed’s success at managing the market’s interest rate expectations. He suggested that the current threshold at 6.5% remained sufficient to “approximate what’s called the Optimal Control path of interest rates, that it seems to give a path of unemployment and inflation that’s about as good as we can get with the monetary policy tools that we have.”

How can we show that the 6.5% threshold was sufficient in December? Exhibit 1 shows the Optimal Control path for the funds rate that minimizes the deviations of inflation from 2% and the deviations of the unemployment rate from 6% – last updated in November 2002. The exhibit also shows the unemployment rate progression under that path. An important assumption in the Optimal Control analysis is that the public fully anticipates that the FOMC will follow this optimal plan. For the path of rates to be effective, the market must believe the Fed will follow the plan. The more transparent the Fed is regarding its intentions, the more likely it becomes that the Optimal Control path for the funds rate will achieve its goals.

Understanding why the Fed set the initial unemployment threshold at 6.5% will help you understand why they may change it in the future. Exhibit 1 shows that the unemployment rate will cross 6.5% around November 2015 given the Optimal Control path of rates. Under the framework, the first 25bp rate hike will occur in September 2016, or nine to ten months after the unemployment rate reaches 6.5%.

If the Fed had chosen 7.0% instead of 6.5% for the threshold, the unemployment rate would cross in March 2015. With a 7.0% threshold, the Fed would have a difficult time explaining why the Optimal Control liftoff was projected to take so long (almost 1 ½ years) after having seen substantial improvement in the labor market (assuming that reaching the threshold proxies for “substantial” improvement). In addition, the market may not have believed that either (1) a 7.0% unemployment rate would constitute “substantial improvement”, or (2) the Fed would be able to keep rates on hold for that long after the unemployment rate reached 7.0%.

If the Fed had chosen 6.0% – a more understandable threshold, given the SEP’s longer run central tendency range for the unemployment rate between 5.2~6.0% – the unemployment rate would reach the threshold in September 2016. In this case, with the Optimal Control funds rate projected to lift off in the same month, the market may have interpreted the “threshold” as a “trigger”. Given the Optimal Control analysis – which Chairman Bernanke and Vice Chair Yellen seem to favor – we can see why they chose 6.5% for the threshold in December 2012: they had to make sure the “buffer” between crossing the unemployment threshold and the start of rate hikes was neither too long, nor too short.

Mon, 04/29/2013 - 12:04 | 3510263 bnbdnb
bnbdnb's picture

Tyler, you are just making it worse. Shutup!

Mon, 04/29/2013 - 12:27 | 3510358 polo007
polo007's picture

According to Bank of America Merrill Lynch:

http://www.scribd.com/doc/138127514/US-Economic-Weekly-Bank-of-America-Merrill-Lynch

Macro viewpoint

Easy in, easy out

- Review: The choppy slowdown continued into April, with better jobless claims but weak regional manufacturing surveys.

- Preview: The April employment report will be a good test of whether the March weakness was a fluke or a sign of sustained weakness. We look for a sub-consensus 125,000 increase.

- Hot topic: With persistently sub-2% inflation, the case for continued QE is building. When the Fed does finally head for the exit, the key question for investors is the same as it has been in the past: if inflation is low, it will be a soft landing; if inflation is high, buckle your seatbelts.

Mon, 04/29/2013 - 13:22 | 3510525 Clowns on Acid
Clowns on Acid's picture

Ben said to nuy equities and thats all they are doing....bad eco numbers? No worries...simply confirms that Ben will print moar....

Mon, 04/29/2013 - 13:40 | 3510571 luna_man
luna_man's picture

 

 

Fact of the matter...Aint no recovery!...Squeeze?  Who's squeezing, who?

 

"shorting", however long it takes!  Keep up the good job MY MAIN MAN

Mon, 04/29/2013 - 14:17 | 3510704 Nobody For President
Nobody For President's picture

As an old value investor that has a comforatable retirement having started buying stocks in 1963, my avatar is looking more realistic all the time. My Russel bear hedge is working just fine to offset all the paper gains in my long term holdings, thank you very much. 

I mean, the Dallas Fed absolutely tanks today - and the market goes up. WTF in caps, boldfaced with ? marks. I know it is no longer a 'market', but do they have to be so god damned obvious about it? The old quote "The market can stay irrational a lot longer than you can stay solvent" gets more applicable every day.

But Fed or no Fed, Uncle Ben or no, this is going to end very badly. But it IS tiresome to get one's face ripped off...

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