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And The Reason For Today's Bathsalts Rally Is...

Tyler Durden's picture





 

... Nothing more (or less) than NYSE short interest as of June 15 (at 14.7 billion shares) soaring to the highest since October 2011, just before the mega ramp on the previously mentioned October 26, 2011 Greek "Bailout" started on another total non-event as history would show (as would be the ensuing global central bank interventions, and LTROs 1+2). This is also tied for the 3rd highest short interest since July of 2009. Which brings us to the following question: we know that over the past month the only stock "market" catalysts have been small groups of "educated" central-planners: the Fed, SCOTUS, and Eurocrats, with the only upside catalyst being taxpayer cash. Does the chart below mean that the only technical item that matters is Short Interest (as well as short interest in the highly levered and beta-rally inducing EUR), and every time this number rises above a given threshold the various Wall Street repo desks will merely engage in forced buy-ins and cause epic short squeeze like the one today? We don't know. However, we do know that with both long-side and short-side trading becoming meaningless and everything now just an HFT-facilitated stop hunt, this is the surest way to make sure nobody is left trading these markets anymore, something which relentless ongoing cash outflows from equity funds confirm every single week. The good news: once the weak hands have covered, a new wave of shorts can reenter, only to be burned as well on the next overhyped non-event out of Europe or anywhere else.

 


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Fri, 06/29/2012 - 12:59 | Link to Comment dukeness
dukeness's picture

Bathsalts Bitchez!

Fri, 06/29/2012 - 13:00 | Link to Comment Silver Bug
Silver Bug's picture

The Market has completely gone off the deep end. On a day to day basis it makes no sense. Hold your gold and silver tight.

 

http://ericsprott.blogspot.ca/

Fri, 06/29/2012 - 13:36 | Link to Comment Randall Cabot
Randall Cabot's picture

There must be a shitpile of oil shorts in there.

Fri, 06/29/2012 - 14:07 | Link to Comment The Monkey
The Monkey's picture

Let's see: last time short interest was that high, the market took off to new highs. It won't get there this time, but the squeeze will continue.

Fri, 06/29/2012 - 13:08 | Link to Comment Cash-NonCash
Cash-NonCash's picture

Bathsaltz market contributing to a lovely flag on SPY weekly chart.  Short this bitch!

Fri, 06/29/2012 - 14:25 | Link to Comment spastic_colon
spastic_colon's picture

save this article for monday's "first day of the quarter/month/half year" rally as well, the flag may take a few weeks to play out.

Fri, 06/29/2012 - 13:12 | Link to Comment battle axe
battle axe's picture

Low volume, so if someone does a trade, the market looks like it is exploding. Joke.

Fri, 06/29/2012 - 13:54 | Link to Comment Randall Cabot
Randall Cabot's picture

From CNBC of all places-must be a psy-op:

 

Here Are Four Good Reasons Not to Trust Today's Rally

 Published: Friday, 29 Jun 2012 | 1:17 PM ET

 

 

 http://www.cnbc.com/id/48013560     

 

 

 

 

 

 

 

 

 

Fri, 06/29/2012 - 14:28 | Link to Comment spastic_colon
spastic_colon's picture

the main stream financial media are becoming purposely contrarian in their headlines and stories, you are being gamed, they have figured out the rules to the current behavioral investing crowd ala their very intelligent masters.

Fri, 06/29/2012 - 13:13 | Link to Comment Id fight Gandhi
Id fight Gandhi's picture

Bathsalts rally -- it's a face ripper!

Fri, 06/29/2012 - 13:27 | Link to Comment Withdrawn Sanction
Withdrawn Sanction's picture

End-of-quater PUMP.....stand by for the DUMP

Fri, 06/29/2012 - 19:28 | Link to Comment Debt-Is-Not-Money
Debt-Is-Not-Money's picture

"End-of-quater PUMP.."

Correct!

End of Month,

End of Quarter,

End of Half,

OPM bitchez!

Fri, 06/29/2012 - 13:00 | Link to Comment GeneMarchbanks
GeneMarchbanks's picture

Ah, the reason. That is cute.

Fri, 06/29/2012 - 13:11 | Link to Comment derek_vineyard
derek_vineyard's picture

why does everyone want to claim they know the reason that markets do what they do on a daily basis?

insanity knows no reason

Fri, 06/29/2012 - 14:29 | Link to Comment Withdrawn Sanction
Withdrawn Sanction's picture

that's just crazy talk

insanity IS the reason

Fri, 06/29/2012 - 19:48 | Link to Comment John_Coltrane
John_Coltrane's picture

The reason is simple and boring:  more buyers than sellers = price goes up, more sellers than buyers = price goes down.  How would you like to see that headline everyday?  And it works for everything from stocks to cocoa prices.

Fri, 06/29/2012 - 13:37 | Link to Comment BlandJoe24
BlandJoe24's picture

Reason is clear:

Profit

Cold, hard, ruthless, disconnected from reality, consequence be dammned, (short term) profit

.

Fri, 06/29/2012 - 13:00 | Link to Comment RationalPrepper
RationalPrepper's picture

Time to clinch and pull out?  Seriously, just cash out of all positions and go 50/50 paper bills and PMs?

Fri, 06/29/2012 - 13:11 | Link to Comment Divided States ...
Divided States of America's picture

I did my part and took out more cash from my investment account to buy gold yesterday. We all know the system is crooked so as long as everyone convert their cash into hard assets, they will turn out fine. But make sure you are the first 1% doing so because if the financial system is levered 100:1, the remaining 99% will be screwed once all the cash is preserved into gold.

Fri, 06/29/2012 - 13:52 | Link to Comment BlandJoe24
BlandJoe24's picture

"as everyone convert their cash into hard assets, they will turn out fine"

Not if we continue going into to a severe deflationary depression, in which case the value of (non-necessity) hard assets (yes, including gold) will plummet, and cash (in the reserve currency) will be king.  Once deflation finishes deflating (could be a few brutal years), that's the time to scoop up hard assets - including gold - on the cheap.

Prepping investment-wise for a deflation (sell hard goods, go into cash) and a HI (get rid of cash, buy hard goods) are very different.  Since significant deflation MAY precede HI, RationalPrepper's idea to go 50/50 is covering the bases.....very rational!)

Prepping practically for sever deflation or HI is very similar:  build community support and local sustainability and resilience, store essentials, share skills, get rid of what you don't need, simplify, etc.....

 


Fri, 06/29/2012 - 13:16 | Link to Comment William113
William113's picture

Don't forget DIAMONDS. They are traded every where in world. Shh don't tell anybody.

Fri, 06/29/2012 - 13:20 | Link to Comment pods
pods's picture

The "value" in diamonds is due to a constricted supply by a cartel.

Gemstones, yes, diamonds, no.

pods

Fri, 06/29/2012 - 13:31 | Link to Comment Withdrawn Sanction
Withdrawn Sanction's picture

There are something like 16,000 different combinations of color, cut, clarity, carat, etc.  Bottom line:  there are better stores of value and easier media of exchange.  Still though, diamonds probably better than bank accounts.

Fri, 06/29/2012 - 23:27 | Link to Comment Mesquite
Mesquite's picture

Re: Diamonds...

Don't forget...They now can be manufactured...!!

Fri, 06/29/2012 - 13:02 | Link to Comment deejo
deejo's picture

So where do we go from here, Mr. Durden ?

 

Fri, 06/29/2012 - 13:13 | Link to Comment derek_vineyard
derek_vineyard's picture

50% chance long   50% chance short

 

Fri, 06/29/2012 - 13:24 | Link to Comment Id fight Gandhi
Id fight Gandhi's picture

100% fucked

Fri, 06/29/2012 - 13:20 | Link to Comment vast-dom
vast-dom's picture

go fuck yourself. that would be a start. as we all have been fucked by the fed and central planning and fraudulent banks.

Fri, 06/29/2012 - 13:45 | Link to Comment fuu
fuu's picture

Hey grats on the 188 hours!

Fri, 06/29/2012 - 13:46 | Link to Comment spekulatn
spekulatn's picture

"On a long enough timeline the survival rate for everyone drops to ZERO."

Fri, 06/29/2012 - 13:02 | Link to Comment Jack Sheet
Jack Sheet's picture

A bit of dividend doesn't hurt.

Fri, 06/29/2012 - 13:05 | Link to Comment midgetrannyporn
midgetrannyporn's picture

short interest is why the s&p goes vertical to a preset level and then straight sideways? Interesting. [/sarc]

Fri, 06/29/2012 - 13:05 | Link to Comment Snakeeyes
Snakeeyes's picture

There is no doubt that BIG GOVERNMENT has really taken control of markets. Obamacare in the US and the EU going down The Fed path.

"The ECB's balance sheet has been opened up via the ESM to directly recapitalize the European banking system." So the comminique.

http://confoundedinterest.wordpress.com/2012/06/29/angelas-angst-germany-surrenders-and-allows-direct-bailout-of-spanish-banks/

Fri, 06/29/2012 - 13:09 | Link to Comment Dr. Engali
Dr. Engali's picture

Good Lord the people jumping on this thing every time it down ticks are fucking stupid. What is so hard to understand about the fact this is no longer a market? It is a policy tool. It is the Bernank's stated policy that market shall be elevated. It won't be allowed to collapse until it's time and by then it will be too late.

Fri, 06/29/2012 - 13:10 | Link to Comment BandGap
BandGap's picture

You want to take the candy away from the kids, don't you?

Fri, 06/29/2012 - 16:28 | Link to Comment Jake88
Jake88's picture

yeah kids don't know what's good for them.

Fri, 06/29/2012 - 14:28 | Link to Comment eclectic syncretist
eclectic syncretist's picture

The only thing holding the facade in place is the confidence of the people in the system, and that is slipping further every day.

The system is slowly destroying itself, as it always has in the past. 

Fri, 06/29/2012 - 13:09 | Link to Comment BandGap
BandGap's picture

When I think about it I touch myself.

Fri, 06/29/2012 - 13:09 | Link to Comment fonzannoon
fonzannoon's picture

so it seems anytime there is short interest the shorts will just get slaughtered. Pretty simple.

Sat, 06/30/2012 - 13:59 | Link to Comment The Monkey
The Monkey's picture

All I do these days is short stocks. When it gets to be a crowded trade, just like anything else, you close.

This EU move has to pose a big dillema for the bulls. They likely didn't want prices to take off from these levels and were hoping for a deeper correction. Oh well. Too late now. We should have some improving macro data series over the next two months along with earnings that will come in below par, but with enough bright spots to keep the market afloat.

There is too much money on the sidelines to hold prices down at this juncture - EU + CB action + earnings season.

Remove some addional uncertainty about the EU and were going to have very cheap short entries within 60 days. High prices are bearish.

Fri, 06/29/2012 - 13:10 | Link to Comment monopoly
monopoly's picture

This is a perfect post. The exact reason I have babbled here for months on the fruitless (with of course notable exceptions) task of shorting a broken market. I trust nothing, even short term, except a "true currency". That helps me sleep well at night. I will admit the last couple of weeks have been trying, but we have all been there before, and we will be there again, that is just the nature of the game.

No shorts, long gold, silver, miners and some shit confetti.

Fri, 06/29/2012 - 13:12 | Link to Comment BandGap
BandGap's picture

It's easier to manipulate without shorts - Dr. Double Entendre

Fri, 06/29/2012 - 16:29 | Link to Comment Jake88
Jake88's picture

keep it in your pants douchebag

Fri, 06/29/2012 - 13:22 | Link to Comment chinaguy
chinaguy's picture

Can any one offer a brief explanation why platinum is under-performing gold by such a large margin? - thanks

Fri, 06/29/2012 - 13:56 | Link to Comment Strut
Strut's picture

Its a commodity, not a store of wealth. the 2008 crash should have made that clear to everyone.

Sat, 06/30/2012 - 14:04 | Link to Comment The Monkey
The Monkey's picture

I like your sentiment as a bear. Shorts are useless.

Short interest was, and probably still is, high enough to propel a good rally from here - even though prices are too high. Perfect set-up.

Fri, 06/29/2012 - 13:35 | Link to Comment ATG
ATG's picture

LOL TD/ZH:

BTW, 14 June 2012 the ISE Opening Long C/P ratio also hit a ST peak just before the market and short interest. 

 

Normally on a huge rally day like today,

ISE ISEE Opening Long EQ C/Ps would be several hundred percent strong.

 

Not today:

http://www.ise.com/webform/viewpage.aspx?categoryid=126 

 

 

Sold SPY Jul 131 calls and accumulating QQQ Jul 64 puts:

http://richcash8tradeblog.blogspot.com/ 

 

PS: In July 2007 and July 2008, short interest also peaked, the first just before the top, and the second half-way through the 2008 decline/crash:

http://www.zerohedge.com/sites/default/files/images/NYSE%20SI%2010.15.jpg

Fri, 06/29/2012 - 13:10 | Link to Comment Fidel Sarcastro
Fidel Sarcastro's picture

FORCED short covering?  Isn't Falcone going to JAIL for that?

 

Surely the feckless SECwill be on the banking mafia for this...jail terms are coming - right?  sarc-off

Fri, 06/29/2012 - 13:12 | Link to Comment Dollar Bill Hiccup
Dollar Bill Hiccup's picture

Burn baby burn. This market is a disco inferno.

Oops, I may have just committed a faux pas by using that imagery in close proximity to the recent European summit.

And au contraire, the "market" is making perfect sense, given the new rules of the game. Witness the Sack man, who won't leave the FED while he's still on top.

Fri, 06/29/2012 - 13:13 | Link to Comment orangegeek
orangegeek's picture

In the grand scheme of things, the primary count remains bearish for the SP500.

http://bullandbearmash.com/index/sp-500/daily/

The trend remains firmly down.

Fri, 06/29/2012 - 13:13 | Link to Comment HaroldWang
HaroldWang's picture

It's hysterical that analysts are saying buy stocks with exposure to Europe now. Really? So just because of this plan to make a plan that will take months to implement, that will somehow, suddenly make everyone in Europe want to go out and buy everything they couldn't buy yesterday? Amazing.

Fri, 06/29/2012 - 13:27 | Link to Comment Id fight Gandhi
Id fight Gandhi's picture

Amazing how they forget all the profit warnings too.

Macro micro, it all sucks. Bring on earnings season.

Fri, 06/29/2012 - 14:06 | Link to Comment Hype Alert
Hype Alert's picture

It took our Debt Super Committee months to work out a plan, the market soared.  See how well it works.  Over and over again.  Wash, rinse, repeat.

Fri, 06/29/2012 - 13:17 | Link to Comment slewie the pi-rat
slewie the pi-rat's picture

yup!  the markets are screwed down tight and the checks are in the mail

i guess the pols can still run a tab until they can't anymore if we're fukin styoooopid enuf to let them

but it looks like we can get slowly back to work earning money the old-fashioned way:  maybe even the banksters and ubers?

you got good credit and fab ideas?  help yerself to the debt saladio!  or, just work pumping gas and chasing skirts and wait for a rich guy who likes lesbians to pull in...

Fri, 06/29/2012 - 13:24 | Link to Comment NotApplicable
NotApplicable's picture

Where's my damn 3k? I need thingamajigs.

Fri, 06/29/2012 - 13:19 | Link to Comment q99x2
q99x2's picture

The swings I remember were like 3 to 5 hundred on the Dow. This one seems to be more on the EURO/Dollar causing the markets to move. But yes it works if you work it. Keep coming back.

 

Fri, 06/29/2012 - 13:31 | Link to Comment Catullus
Catullus's picture

Brian Sack is not resigning from the Fed. That's got to count for like 200 points.

Fri, 06/29/2012 - 14:53 | Link to Comment Village Smithy
Village Smithy's picture

Have no fear the short squeeze game is drawing to a close.  I would go as far as to say that this strategy relied on the growth of truth seeking blogs like ZH for its success. Thousands of traders reading the truth and rationally believing that market should reflect that reality, shorting accordingly. It's all the PDs needed, lots of small to medium sized short positions with tight stops. Let them build and then back them all out with a flood of ZIRP money. Pass the word down the line that the gig is up. Oh, and Ben, the free ride is over.

Fri, 06/29/2012 - 13:48 | Link to Comment Vince Clortho
Vince Clortho's picture

You can call it short covering, or perhaps some Einstein can find a data tidbit or a techinical chart and claim to have found the reason for  a 230 point rally in the face of extreme negative economic reality.

But the real reason the "market" is up is because the CBs felt like it, for reasons of their own.

In our current system, this is what passes for a "market" and that is all anyone needs to know.

For those of you still investing, good luck.

Sat, 06/30/2012 - 02:09 | Link to Comment steveo77
steveo77's picture

Investing is called gold, 

Other stuff is called trading

 

Fri, 06/29/2012 - 14:34 | Link to Comment Crash2012
Crash2012's picture

This is an easy one.

 

The fund managers need a nice 2nd qtr number, so the market goes up so they can print statements.

 

Next week, well ....

Fri, 06/29/2012 - 23:17 | Link to Comment Godisanhftbot
Godisanhftbot's picture

 If ya'll really knew anyting ya'll would be posting from your private island.

 

 Instead of  a shack in Appalachia.

Do NOT follow this link or you will be banned from the site!