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As The Margin Calls Come In, The Most Shorted Stocks Are Doing Just Fine
One would think that in today's abysmal tape, where as many have described the market moved in a way that has never been seen before, the most hated, most flawed, and thus most shorted stocks would be crashing far worse than the broader market.
Well, no. Because here, once again, we get a great lesson in practical liquidity management.
As the margin calls start to trickle in - and just wait until 3 pm when it will be a full blown margin call massacre - hedge funds are forced to release margin. They do that by covering all those stocks which they and their peers entered en masse as the most shorted hedge fund names.
End result, the most shorted names are now unchanged for the third day in a row even as the S&P has been in virtual free fall mode, confirming that paradoxically in this broken market, it is the scariest places that end up being the safest. Alternatively, it means that when the real liquidations begin, it will be the highest quality stocks that will get butchered, just as seen in today's market.
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CME Group Inc plans to cut 5 percent of its global workforce, or about 150 jobs, the world's largest futures exchange operator said on Tuesday.
Most of the layoffs will come from CME's technology operations, with the rest coming from corporate and administration functions, the Chicago-based company said.
Shares rose 1.4 percent to $80.14.
BULLISH.
I think it is time to check how my VXX and SDS is doing.
last hour of the trading day
meet
TEXAS CHAINSAW MASSACRE!
this is going to be a bloodbath!
One of the oldest stories in the world of trading is this.
When you get a margin call, you sell whatever you can because that's the only way to come up with funds to cover the call. The garbage that caused the margin call is worthless.
THIS is more serious than the Ebolas!
Can you say; "Backwardation"
Correct
it is the day when all your "alpha" will be wiped out plus your firm reputation if you can not unwind or your book can not stop the bleeding fast enough.
Apple and the action in Apache, Devon and Oasis (heavy NY names) I bet we will see or learn who got margin called by Friday. I know of 6 (was 5) funds who are in pants on head panic mode right now.
We need to hit 1800 in order to actually "reset" the curve.
Ironically, Bank of America actually had one of their best quarters in 4 years. lol.
Who gets margin calls? I thought brokers just go ahead and sell your shit out from under you.
Yep, they blow you out at 1:15pm max, they don't screw around anymore, especially on days like this.
Yes in the old days when I was wrong, I would get the courtesy call, please add funds to your account. When I was young I had not read Jesse Livermore's little red book. WHEN YOU ARE WRONG you DON'T have enough MONEY to be RIGHT! I would add funds and LOSS more ha! Now, I don't screw around, I sell long before the call needs to be made. People who say they always make money are either banksters, Liars or BOTH!
Sorry kids birds going down hard, but not today. She closes between 0.5 and 1 percent down.... the pumps start at 2:30....
The headline will read, stocks closed well off their lows....
Watch ^rut, thats all you need to know. This move is from 401ks (large caps and index funds being parked) the fun aint started yet.
pump started at 2:21......
dupe
Tylers- deeper dive on this, please. Bring out one of the old-head Tylers and just annihilate us with the technical side of this.
IT WILL NOT BRING YOU MASSIVE CLICK COUNT. IT WILL NOT GENERATE HUNDREDS OF POSTS.
But you should do it anyway.
I agree. Kinda like the old days of ZH. Hardly a day went by that I didn't have to research some new terminology or financial element. Kinda miss that...
.
Yup, I remember back in my lurking days, I'd be like "WTF does that mean?" So I'd go look it up and learn something.
Thank god for those old days at ZH. They saved me from the bloodbath that's going on now. You bet I too learned a thing or two.
ZH is the financial education our schools fail to provide. A beacon of light in a dark universe.
Ahem, unless you invested in gold...
Yeah, someone who is not jammed or riding the ripcurl (not Dan Loeb) right now really should post to eveyrone what intensity of sell burst and what are they key terms for beige tonight, so after-thefact retail & ZH followers can learn from today's market breakdown going into the Thursday decouples.
VIX 30 is important for alot of prime broker and risk desks; and usually means trades where you "thought' You had a VAR of 5, now become instant liquidations, esp in mutual funds where moves of more than 4% in 7 days to the downside require a review, right to the CIO suite before any new capital is unlocked to the manager.
PPT moved in Smart money moved out. Market watch came back up and now free fall
Been in SDS since 2012, been a hard one to hold onto and swallow, but I fucking knew this swan was going for a dive. Licking my chops seeing the Stalingrad and Poorski down 2%+. Looking to be back in the money by 12/01. Let's watch some fireworks boyz.
Got worried, checked my silver stack. Still there. Whew!
Tanky tanky, marky spanky....
Wanky wanky, tears in hanky...
pumpy dumpy, a steamin lumpy...
Poor marky marky, no more sparky....
So the ship is upside down ?? We want to go to the bottom of the ship not to drown !!!
Just checked and the DOWn was south of 400. I have to admit, it moved.
pods
Something is missing. They should not be allowing for an orderly exit. Need a 5 percent negative day followed by the big one.
It's only orderly till someone panics. That 'oh fuck' moment will arrive but it can't be predicted.
with HFT they can at least keep it orderly.... I dont see the limit down days... I hope I am wrong, as I want to get to the reset, but I think they can pace her down.
GPRO, exception to the rule? What are the stocks in the "most shorted"? Top 10, top 50 shorted? According to Finviz or what.
BRING IT ON!
This has been a loooooong time in the making.
Having said this, watch the PPT go into overtime/overdrive here shortly.
2:30ish today the big pumps start..... they got enough shorts on to face melt em
OK, I'm not surprised by a chart every day, but that one was an eye-opener. Better performance PLUS protection from low liquidity ass-rapings, all in one handy package.
Anybody got a good ETF for that?
Mommy!
"When the real liquidations begin"? I think we might be there.
Confucius say: he who have black stools will cause black Tuesday
Only if your options pricing follows the Black-Stools model.
Been waiting to break out my titanium umbrella. I may need it on the walk to the subway.
... dow is not even 10% off the all time high ... and it feels like the shtf moment ...
I need to see 1000 dow points drop per day for 3 straight days to be convinced central command has received order from congress to crap the system
Again, seems too orderly. Could be wrong of course.
Yes. It is targetted to collapse sacrificial lambs only
My hunch as well.
So true, these days big down, small up are the markets that bleed the sheep dry like the walking dead. The downside is over when you see the catastrophic 1000+ down day. Smart money, waits and buys for a dime on the dollar. Money is made when you have to ring the blood from your cloths to place an order.Will 666 be the buy point again?
I wonder if ol' shamelessl Cramer is shitting bricks?
Nah, he is prolly saying "Folks, I'm telling you, NOW is th etime to buy"
I was just thinking about the loud, bald one and wondering what his great buy oppurtunity is going to be...
DOW -434, SPX -53... Shit real now?
I hear you.LOL Jump you fuckers!
No, still "overbought". See credit.
Yes. Dow is overbought by at least 10k points
I agree with ekm. The market is overbought by magnitude of years now.
Edit: Sorry ekm. Didn't mean to speak on your behalf. I did not see your reply when I made mine.
Thx, Cangaroo
Watching rates at the close of Treasury market, seeing the 30 yr. at 2.9 and the 1 month move from .2 to .4 was a sign of the turn I think? This is the very old school sign a REAL recession is in the works. Short yield sells and buys long, even at 2.9 on 30 yr. money wow!
https://www.tradingview.com/x/VmcTWwco/ Biggest decline since 2012 folks
Aye Captain, the hull has been breeched...
just moved 10% of my 401k cash holdings to S&P... Each time it drops another 10% I'll make another move. After it's dropped 50% we should get QE14, stocks shoot to the moon, and I'll switch back to all cash. FU FED. QE 4 should be announced early next week.
Actually, 2015 is shaping up to potentially be one hell of a ride. Not in a healthy way... but, if you got to play... go with the flow.
Time-wise they've got to address this crap now and get it all over with before the next presidential election so they can ramp the market up again. Yawn.
Who said, "You can't have it both ways?"
And what exactly is Cognitive Dissonance?
Pension funds have the cash-flow gun to thier head. Risk? What's that? Just show me the $?
(yeah, it ends well of course... in a blinding flash).
CalPers is one giant nail gun accident waiting to happen....
TIMBER
Make "margins" 100% for all commodities, end this paper bullshit already and send these useless paper-pushing fucks to the guillotine already.
until that happens, same as it ever was.
I believe they're trying to draw cash in from the sideline muppets.
Hint, Hint:
There isn't any.
You do have to admit there is a real need for paper for producers right? I doubt you could run any food production, airline without paper? A hedge used as a HEDGE is a very smart move. What I would do is state YOU must be a NET buyer of goods in the contracts you buy over the year? That would push out the pretenders and re-create a balanced market for producers? I would love to hear your comments on that. Thanks
10% hit!
https://www.tradingview.com/x/4qKXY7Yx/
It's harvest time for digits.
Where are all the HFT guys now?
They must be providing liquidity somewhere else. I dunno.
So... "Most shorted" now equals TBTF.
Bizarro World, indeed!
The snapback rally should be interesting to observe.
The most shorted not miving = fairly priced. Fu@k the "priced in" bullshit as down it goes.
Greek stock markets are down 9%
http://www.businessinsider.com/greece-down-2014-10
Greece was the canary in the coal mine. Globalization sucks.
Greece was the canary in the coal mine. Globalization sucks.
My "permanent portfolio" is doing fine - up again today...do your homework before investing folks! Waiting patiently for 3pm to roll around...
Until INVESTORS decide to end the PROTECTION RACKETS that have destoyed the integrity of the market and liquidate FLOAT scams instead. DO NOT BUY ANY VIX RELATED PRODUCT. DO NOT BUY PUTS ON FUNDAMENTALLS SOUND COMPANIES. LIQUIDATE FLOAT SCAMS TO RAISE CASH AND BUY GOLD, WHICH IS THE ONLY INSURANCE YOU NEED AND HAS NO EXPIRATION.
Put your Bio hazmat suits on if you walk past trading offices...dont want to get any trader guts on you as they jump...they may have been flying recently...
Shorts, futures, derivitives, puts, calls are way above my head as an investor. But it makes intuitive sense that the most shorted is more stable as there are tons of people that have to cover their positions.
perfectly sublime statement, but really, the market is going down like a rock, and you have to COVER YOUR SHORTS? wtf??
There are margin calls coming on the net longs. Apparently, they liquidate their shorts (winners) to cover the damage to their longs (losers). Hence the most-shorted names will catch a bid, but the quality stocks that are up will see selling in liquidation as well.
Over 184 and the dip will have been bought
Bitcheeeeeeeezzzzzzs
these most shorted stocks are usually companies with some sort of questionable balance sheet or business question. in light of that they are probably under owned, compared to say the big techies which are over owned. the good companies are being shorted through the etfs. and that group is very nimble and very leveraged. the companies with the most shorted stocks are probably under represented by the etfs, and manage to duck the selling on that account, and who exactly would want to open a new short position in an issue already heavily shorted, (its also very hard to find shares to borrow in an environment like this). eventually these weak companies will have their day as well. right now its just a bull market correction.
I smell a run on popcorn.
Pfff. It's just getting more room into earnings, making those stocks cheap that will rise the most in the coming weeks.
What is really nuts, the 10yr. Treasury is near 1.9%!