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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dukeness's picture

Bathsalts Bitchez!

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/

Randall Cabot's picture

There must be a shitpile of oil shorts in there.

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.

Cash-NonCash's picture

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

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.

battle axe's picture

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

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     

 

 

 

 

 

 

 

 

 

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.

Id fight Gandhi's picture

Bathsalts rally -- it's a face ripper!

Withdrawn Sanction's picture

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

Debt-Is-Not-Money's picture

"End-of-quater PUMP.."

Correct!

End of Month,

End of Quarter,

End of Half,

OPM bitchez!

GeneMarchbanks's picture

Ah, the reason. That is cute.

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

Withdrawn Sanction's picture

that's just crazy talk

insanity IS the reason

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.

BlandJoe24's picture

Reason is clear:

Profit

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

.

RationalPrepper's picture

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

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.

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.....

 


William113's picture

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

pods's picture

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

Gemstones, yes, diamonds, no.

pods

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.

Mesquite's picture

Re: Diamonds...

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

deejo's picture

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

 

derek_vineyard's picture

50% chance long   50% chance short

 

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.

fuu's picture

Hey grats on the 188 hours!

spekulatn's picture

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

Jack Sheet's picture

A bit of dividend doesn't hurt.

midgetrannyporn's picture

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

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/

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.

BandGap's picture

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

Jake88's picture

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

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. 

BandGap's picture

When I think about it I touch myself.

fonzannoon's picture

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

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.

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.

BandGap's picture

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

Jake88's picture

keep it in your pants douchebag

chinaguy's picture

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

Strut's picture

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

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.

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

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

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.

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.