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Short Squeeze Bloodbath To Start The Week

Tyler Durden's picture




 

After "most shorted" stocks had their best (i.e. worst or biggest loss) week in 2 years last week, it was perhaps not entirely surprising that 'they' would smash VIX and JPY to manufacture a short squeeze bloodbath this morning at the open...

 

Last week saw "most shorted" stocks drop almost 6% - the biggest loss in 2 years...

 

So hardly a huge surprise that today would start with a short squeeze bloodbath...

 

Of course, we've seen this kind of short-term stop-running squeeze before...

 

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Mon, 05/12/2014 - 11:15 | 4750833 schooltruth
schooltruth's picture

Isn't time for Gartman to signal all clear for Stocks?? My puts could use the help...

 

:)

Mon, 05/12/2014 - 11:24 | 4750862 y3maxx
y3maxx's picture

...The Market Top occurs the day President HalfrObama has both His "Frauded" Birth Certificate and Foreign Student Loans "Exposed". ...Immediately followed by various States announcing Secession.

Mon, 05/12/2014 - 11:41 | 4750945 NotApplicable
NotApplicable's picture

Wow, looks like your just as addicted to Hopium as the rest of the voterbots.

Here's a clue, none of that shit means ANYTHING, as the integrity of the entire structure has been taken down by organized crime.

As for your secession dreams, I'll merely point out that most states would implode in an instant without handouts from Uncle Sugar. After all, there's a reason that they've all been indebted in the first place. (think unemployment benefits)

Mon, 05/12/2014 - 12:25 | 4751123 Say What Again
Say What Again's picture

They can squeeze as hard as they want.  My partners and I will not relent.

Mon, 05/12/2014 - 12:48 | 4751210 eclectic syncretist
eclectic syncretist's picture

They're twisting your melon man.

http://www.youtube.com/watch?v=KnBi-LNM0Og

Mon, 05/12/2014 - 13:32 | 4751363 Say What Again
Say What Again's picture

No one touches my melon except my girlfriends.

On a rare ocasion my doctor touches other parts and asks me to cough.  I never really understood the bit about coughing.

Mon, 05/12/2014 - 14:02 | 4751475 eclectic syncretist
eclectic syncretist's picture

Wait till they want to have a go at your prostate.  You'll feel like you've been to a Fed meeting.

Mon, 05/12/2014 - 11:45 | 4750960 Squid Viscous
Squid Viscous's picture

that ass clown Jim Paulsen just said we're about to get another move up, almost as good

Mon, 05/12/2014 - 11:54 | 4750995 slaughterer
slaughterer's picture

Remember: tomorrow is terrific Tuesday, the day ES pops 1900.

Mon, 05/12/2014 - 11:15 | 4750835 LawsofPhysics
LawsofPhysics's picture

Again there is no such thing as "some manipulation".  Absolute power corrupts absolutely.

 

Mon, 05/12/2014 - 11:19 | 4750849 Soul Glow
Soul Glow's picture

Economists are paid to spout the rhetoric they are taught to.  Finaciers are paid to make the most money for their employers.  Politicians are paid to seek the best interest of their donors.  The system is set up to benefit those working the grain no matter if the grain is some horse shit.

Mon, 05/12/2014 - 11:25 | 4750880 LawsofPhysics
LawsofPhysics's picture

History is very clear on how that works out.  More and more going off the grid.  Eventually essential supplies cannot be delievered then real changes comes and heads roll, not before.  Plenty of "bread and circuses" left to distribute.

Mon, 05/12/2014 - 11:36 | 4750922 Soul Glow
Soul Glow's picture

+1

I am not sure how much bread is left.  Mom and Pop are selling their stocks to keep up with inflation - gas, food, etc.  The pull out of the market will strain the finacial system to the point that the "rich" will need to be taxed.  As for circuses, well, the show must go on.

Mon, 05/12/2014 - 13:02 | 4751176 CPL
CPL's picture

Bread and circuses are completely dependent on the supply chain just like anything else is.

They end the moment energy or availability of something drops to expensive/empty and pushes both the bread maker and circus into the poor house.   It's not looking at the bread and circuses that provides the metric or situation.  It's looking at Supply chains.

While supply chains are awesome in their ability to allow for multiple "wdiget X" to be routed around.  Today though they are built to hide shortages and function as a economic weapon instead of a safety net.  The seven places supply chains fail to deliver.

1)  Offshoring, makes it increasingly difficult for anyone to monitor supply chains adequately.  The single largest inventory management platform on the planet, SAP, is the symptom of the disease.  In IT it is colloquially known as "Send Another Person".  It's a huge platform, operates as a C&C business system and it's most popular (and annoyingly complex) feature is the inventory management system.  It is built, at touch of a button, to hide or move available inventory or offer three book inventory accounting on demand.  This is a common business practice in large distribution chain companies and people trade their shares every day.

TO put it in perspective, in a confidence scam, this is also known as three card monte.  In the trade arena, it's what Nortel/GM/Ford/Apple/etc did with channel stuffing inventory.  They 'hide' it on other people's property during quarterlies.  Keep in mind all these companies that do this channel stuffing and lying about fundamentals are all laid like bricks in everyone's portfolio.  The problem is hidden in a large and complex series of partnerships.

2)  Increasing complexity of supply chains, meaning companies were often unaware of who their suppliers were subcontracting to.  This is where it gets really weird.  On top of huge supply chain management systems, those companies that build things aren't actually makers of anything.  They are only offices full of computers and bean counters.  IBM doesn't make computers, it manages companies it subcontracts to that do build computers.  What happens though if energy increases 1% over all?  In most cases the cost is past along to the consumer.  But it doesn't really work that way.

Why?  Contractual agreements of course.

A place like IBM isn't going to pass the cost along because it has contracts with it's retailers.  So in all the contracts out there with their suppliers are just as fixed as their retailers.  Remember, IBM doesn't make anything.  It's just a middle man of boxes and bodies.  So what happens then with that extra cost incurred?  That's easy...Good, Fast and Cheap; only get to pick two options.

3)  Cost pressures, which could lead to compromise on quality and ethics.  While it might not seem like a big deal in IBM's case, it does start to matter on things like car parts and trains and planes.  In Apple's case they have people literally working themselves to death, for next to nothing in the shittiest conditions possible in an IT environment.  Just so someone can have an ipod.  And all this stuff that is distributed through the modern supply chain is spread all over the world.

4)  Then you get geographic clustering, makes manufacturers vulnerable to a localized disaster such as the on going Japanese nuclear disaster in 2011.  Fukushima made a lot of stuff, it was a huge port for trade and fishing.  It also happened to back right onto the northern Pacific current and has done a quick job of the wildlife in the area, which in turn effects the health of all life including people in the area and every industry that they work in.

Say no one worries too much about the environment, but instead substitute a fuel shortage.  A place like Pakistan has been in a brownout for four years now because of energy costs or availability.  Some agencies would point to coal.  But even coal inventory is hard to come by with 7.2 billion people.  It's been used a lot longer than oil.  Most of the easy coal was done 150 years before today to build railroads and all the cities you see.  The early rail did that.  It also made geographic clustering possible because the railway allowed owners to put all their facilities into centralized positions (all eggs in one basket...see where this is going yet?)

5)  Modern communications, which can quickly damage reputations.  What ends up happening here is the companies shuffling cost pressures by making cheaper and crappier goods have to apply a lot of marketing and spin doctoring to cover up poor practice.  When a place like Japan is suffering from a nuclear disaster the first position any company will take is 'cover it up' because the emporor can never be seen without strength...even though they are going to be flacid, sober, electronicless and hungry.  It pushes the entire media universe into a defensive position of "lie or die".

The media cover up aspects of failure in a supply chain is really a function of Just-in-time production methods.

6)  Just-in-time production methods, which have reduced the time to recover from supply chain failure.  So while being distracted fully by the media, the people running the supply chain can adjust where something comes from quickly to make sure everyone is probably drunk, drugged to the tits, amused watching something on tv or occupied with a widget.  

It's amazing how fast the news is to jump on something like a shortage of cabbage patch dolls, pet rocks, tickle me elmo or hard drives is 'like the end of the world man, totally'.  But mention the fact 90 million Americans can't get enough to eat completely baffles them all.  As if feeding people is an unsolvable problem in a country that wastes 70% of what it offers itself with the highest technology available to manage it.  It's disgusting how amazingly stupid and wasteful it all is.

7)  Dependence on multiple suppliers, increasing overall vulnerability.  Not vulnerability by the fact there are suppliers.  The trouble starts because of items 2, 3 and 6 I've noted above.  Eventually one error enters a system...then another...then another...then it's joined by yet another error.  Financial interest isn't the only thing that compounds interest, supply problems do to.  In sports terminology it's called 'quick sand', every one that's played a game knows when there is a turning point where regardless of how hard you've planned, or tried...it's already done.

(To people that think they run things, when the reality proves otherwise. Game on.)

Mon, 05/12/2014 - 14:23 | 4751550 notmymoney
notmymoney's picture

Bravo!  I enjoyed every word.

Mon, 05/12/2014 - 15:59 | 4752018 LawsofPhysics
LawsofPhysics's picture

As a member of a large farming Co-op all I can say is yawn...

 

I went long sharecropping and a dependable tribe a very long time ago.

Mon, 05/12/2014 - 11:16 | 4750836 Soul Glow
Soul Glow's picture

Easy to do when you get tax payers money to make bets in a casino that was made and still operated by the Federal Reserve Board - JPM GS et al.

Mon, 05/12/2014 - 11:20 | 4750852 HaroldWang
HaroldWang's picture

Makes perfect sense. The talking heads tell us they're all on sale now. Git out your shopping lists, folks.

Mon, 05/12/2014 - 11:25 | 4750878 Soul Glow
Soul Glow's picture

You know what's not on sale?  Food.  I bought a salsa from a company I have been buying from for decades - they are local - and the container was half full.  And they used their label to cover the top so couldn't tell there was less food.  

Mon, 05/12/2014 - 11:20 | 4750855 Dr. Engali
Dr. Engali's picture

Monday is the new Tuesday.

Mon, 05/12/2014 - 11:26 | 4750882 Soul Glow
Soul Glow's picture

Everyday is Tuesday now.

Mon, 05/12/2014 - 11:51 | 4750988 101 years and c...
101 years and counting's picture

no. you buy on monday because tomorrow is tuesday.  no way, not a chance stocks drop 2 tuesdays in a row.  unpossible.  therefore, you can put it all in today knowing big gains are coming tomorrow.

Mon, 05/12/2014 - 11:20 | 4750856 Theta_Burn
Theta_Burn's picture

Its shit like this that has me itching to blow the dust of the ole Ameritrade account...

...but then again it was shit like this that had that account mothballed.

fuck...

Mon, 05/12/2014 - 11:21 | 4750861 B2u
B2u's picture

Ha!  What a bunch of horse shit.

Mon, 05/12/2014 - 11:25 | 4750876 yogibear
yogibear's picture

Been happening for the last 5 years.

Suck the shorts in and then sqeeeeeeze them to run up the market. 

 Rinse and repeat over and over again.

Shorts keep thinking, this is it, the big downturn, then the algos play the sqeeze.

 

Mon, 05/12/2014 - 11:27 | 4750885 Soul Glow
Soul Glow's picture

True.  How much longer?  Diminishing returns and whatnot.

Mon, 05/12/2014 - 11:29 | 4750897 The_Ungrateful_Yid
The_Ungrateful_Yid's picture

No one knows unless you are the fed

Mon, 05/12/2014 - 11:33 | 4750911 Soul Glow
Soul Glow's picture

The Fed is holding up a house of cards, standing on a pile of sand.  All they know is their policy will end in disaster, but where it ends nobody knows.

Mon, 05/12/2014 - 11:27 | 4750886 JustObserving
JustObserving's picture

Shorting US stocks is so unpatriotic - so the Fed must take steps to eliminate these vermin

Besides, every cab driver and shoeshine boy knows that US stocks only go up. And inflation has been permanently banned from the land of the free.  Buy bonds even at negative real yields - that's patriotic.

Mon, 05/12/2014 - 13:00 | 4751242 eclectic syncretist
eclectic syncretist's picture

I've seen the future and I've left it behind.

Ozzy Osbourne, 1972

http://www.youtube.com/watch?v=s4zlAd_eXjM

Mon, 05/12/2014 - 11:32 | 4750902 BullyBearish
BullyBearish's picture

As liquidity dimnishes, they'll stairstep this mother down...alternately squeezing the shorts AND the longs!  

 

BTFD has now become: STFR.

Mon, 05/12/2014 - 11:37 | 4750926 SheepDog-One
SheepDog-One's picture

'The shorts'...yea right. That's the Fed rigging it both ways, doesn't cost them a dime to do so.

Mon, 05/12/2014 - 11:48 | 4750973 kellycriterion
kellycriterion's picture

Worst week in two years. So after you eliminate the people who are in some sort of hedged position, who are the people who didn't cash out Fri?

1. Know the biases of the other players.
2. Reversion to the mean. Which includes a wide variety of phenomenon and is informed by 1.
3. Get good numbers. As profits go up your number is getting worse.

Mon, 05/12/2014 - 12:01 | 4751032 Devotional
Devotional's picture

is it me or is Obama NOT going to see a crash during his term as el presidente?

Mon, 05/12/2014 - 12:11 | 4751066 wmbz
wmbz's picture

No, the boyz won't let Obozo down. That would be ray-cyst.

Mon, 05/12/2014 - 12:22 | 4751111 Eyeroller
Eyeroller's picture

That is the sole purpose of the Kenesyians in charge of the FED.  Hold up the house of cards until Teflon Barry is gone.  Blame the next guy (if it's a republican) otherwise blame republican congress or Bush.

Mon, 05/12/2014 - 12:05 | 4751048 wmbz
wmbz's picture

DOW should hit 17,000 by weeks end. Buy now or be priced out forever!

Mon, 05/12/2014 - 12:14 | 4751073 yogibear
yogibear's picture

The Federal Reserve's Charles Evans said he want's the S&P at 2200 this year. So the Federal Reserve aklready set the dial in this planned and rigged market.

Trade accordingly.

They also want to inflate out of debt. So the Federal Reserve is intentionally setting up for massive inflation while still buying US debt to keep rates low.

This inflation will make the late 70's look minor.

Mon, 05/12/2014 - 12:21 | 4751109 moneybots
moneybots's picture

 "They also want to inflate out of debt."

 

That isn't working quite so well in Japan, is it?

Mon, 05/12/2014 - 12:11 | 4751067 experimentals
experimentals's picture

Why is everyone on ZH acting like this isn't what was expected. 2-3 years ago everyone on this site was going wild over QE. All he ZHs were pounding the inflation and hyper inflation scenarios. We saw glimpses of it in food, energy, oil etc. 

Now we are witnessing assets like real estate and the stock market experiencing some major inflation and everyone here starts crying manipulation as if they didnt know it was coming. All that printed money being borrowed by the .01% leveraged and multiplied is moving in on the equities and real estate yet everyone acts like they can't believe what they are seeing. We knew it was coming, ZH was alwqys sounding the inflation horn. I figured if inflation is coming why not leverage up to buy some real estate. Well three years later it looks like a genius move, but there was nothing genius about it. We are witnessing inflation and the beginning phases of hyperinflation. Gold will eventually catch up, or get regulated out of existence. But property will be the biggest beneficiary of a hyperinflation scenario. Hedge accordingly.

Mon, 05/12/2014 - 12:36 | 4751163 doggis
doggis's picture

dude,,

QE is unable to create inflation - because QE "IS" inflation. QE is the act of expanding the credit money in the system. this is the definition of inflation.

 

inflation leads to higher prices - higher prices  begins first with asset prices [equities, real estate, etc] , and ends with runaway consumer prices. Asset prices will crash as a result of runaway consumer prices as limited budgets go to buy the staples of life rather than all that other stuff [ which kills the earnings of all those "other stuff" companies].............

 

Mon, 05/12/2014 - 13:59 | 4751466 eclectic syncretist
eclectic syncretist's picture

Anyone who shorts on margin is a sheep waiting to be sheared as far as the people with the easy money levers and capabilities to know how much is leveraged short out there are concened.

DO NOT SHORT ON MARGIN.  EVER!

Mon, 05/12/2014 - 13:56 | 4751449 kellycriterion
kellycriterion's picture

RE is high in the US, taxes are high in the US, utilities are high in the US, and RE can be illiquid. Risk adjusted return.

When they win, it was written in stone. When they lose they were unlucky.

Mon, 05/12/2014 - 12:27 | 4751126 moneybots
moneybots's picture

"We are witnessing inflation and the beginning phases of hyperinflation."

Most everything at the 99 Cent Only Store is still 99.99 cents.

Mon, 05/12/2014 - 12:50 | 4751209 orangegeek
orangegeek's picture

When positions are small (ergo the low volume), squeeze away.

 

I would guess that any prop trader is trading small and waiting this out.

 

Insitutions who like to fuck around with the system appear to be the bagholders this time around.

Mon, 05/12/2014 - 13:06 | 4751268 yogibear
yogibear's picture

LOL, starting early to pop the market higher.

Mon, 05/12/2014 - 14:50 | 4751680 Notsobadwlad
Notsobadwlad's picture

The "so called" short squeeze is also just another manipulation designd to steal fiat crap paper from others ... who are not insider parasitic criminals.

Mon, 05/12/2014 - 15:57 | 4752005 deerhunter
deerhunter's picture

Wait until electricity rates both residential and commercial rise 35% here in the midwest.  You will hear some shouting going on then.  It is coming an no way around it.  The PJM interconnecting grid is hiking reliability rates over the next two years.  Already written in.  It is all coming folks.  There is very soon going to be one too many holes in the dikes to be plugged.  We have plugged the holes in the other Dykes for years and seem to approve of all that when the real holes that matter will not all be plugged very soon.  Then,  look out below.  Motor on,,,,,,,

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