David Rosenberg On Market Capitulation And How This Short Covering Squeeze Will Play Out

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Thu, 09/15/2011 - 13:08 | 1673850 redpill
redpill's picture

I think I'll just pull a Adoboli and massively short something entirely at random.

Thu, 09/15/2011 - 13:11 | 1673866 Godisanhftbot
Godisanhftbot's picture

 you have a better chance shorting at random, if you short based on rationality, they will target you for sure.

Thu, 09/15/2011 - 13:32 | 1673972 Smiddywesson
Smiddywesson's picture

Absolutely!  Anything, even a Holy Grail system, that puts you on the side of the trade where retail is clustered, is bound to lose in the long run.  The only thing that works in "markets" that are not markets, but are in reality manipulated abominations, is understanding the scam and avoiding the targets of that scam.

If anyone tries to sell you anthing that doesn't factor this reality into the system, run away.

Thu, 09/15/2011 - 14:40 | 1674203 IQ 145
IQ 145's picture

For the tenth time now; you don't short rallies in markets coming off bottoms. And you don't short anything because of gloomy conversation on an inernet blog; S&P 500 breaking above 1200 as predicted here yesterday. Do not Short anything. This is a rally. Oh, and by the way, the author doesn't know shit.

Thu, 09/15/2011 - 14:51 | 1674225 MarkS
MarkS's picture

Sure, of course you know it's a bottom how?  Is it a bottom like the bottoms in Feb, June, and Oct '08?

So far is is a rangebound trade between 1100-1225 maybe after we get a few closes outside the range we'll know for sure.

The author does know shit.  He knows economics, which doesn't make him a good trader or even a good investor necessarily.


So, is your IQ really 145?  I feel so sorry for you, mines so much higher...

Thu, 09/15/2011 - 15:00 | 1674243 HD
HD's picture

Who said it was the bottom?

Thu, 09/15/2011 - 15:37 | 1674367 Tater Salad
Tater Salad's picture

IQ, you forgot these around your number (***)


There, looks better doesn't it.

Thu, 09/15/2011 - 16:23 | 1674578 MiguelitoRaton
MiguelitoRaton's picture

IQ 145? I'm assuming that is the cumulative number for you, your wife and 4 kids.

Thu, 09/15/2011 - 17:16 | 1674801 Savyindallas
Savyindallas's picture

And we're supposed to trust you because you claim to have an IQ of 145? Tell me smart guy - S@P at 1208- at what point do YOU short?

Thu, 09/15/2011 - 13:12 | 1673869 SilverRhino
SilverRhino's picture

The scary thing is that he supposedly had monetary access capable of even generating a 2B dollar loss.


Thu, 09/15/2011 - 13:39 | 1674005 TzaristBondHolder
TzaristBondHolder's picture

someone was BUYING at random -  BNP is up .....

Thu, 09/15/2011 - 13:08 | 1673852 Corn1945
Corn1945's picture

I think it's wise to stay out of this casino altogether.

Thu, 09/15/2011 - 13:23 | 1673920 mac768
mac768's picture

... now we just happen to be at the level of bears close to the 2009 low

what happens next?

... the casino is open for the risk-takers..

Thu, 09/15/2011 - 13:31 | 1673960 Corn1945
Corn1945's picture

I don't understand why the market moves up or down anymore. I'm just guessing and am quite sure everyone else is also. The market no longer has a connection to the real economic fundamentals which makes "investing" akin to coin flipping. There is far too much manipulation and intervention to use it as a price discovery mechanism.

Money is too hard to come by to risk it in a casino-like environment. I would only buy stocks at a level near the March 2009 lows. Dividend yields are way too low to risk capital to chase yield. The risk-reward calculation doesn't come out in my favor.


Edit: Here is a headline I just saw "Bulls Brush Off Weak U.S. Data"

Uh, okay. Why are you buying shares in a company if you are just going to ignore the data? The entire thing makes absolutely no sense.

Thu, 09/15/2011 - 15:27 | 1674240 slewie the pi-rat
slewie the pi-rat's picture

hey, c_45!

Money is too hard to come by to risk it in a casino-like environment. 

yezZeree: esp in a recession/correction/depression! 

i agree and "traders" who keep large sums in the casinos may be facing cerain "counterparty risks" if/when the global goobermints' credit bubble makes a certain tell-tale sound.  we have seen the co-ordination of the int'l bankster cabal, there past 2 days simply b/c da playaz had to reveal their "colluding" in order to stabiliZe the EU and keep china's political leadership credible and also involved

i wonder what r.paul will say to the benzelbub @ their next "hearing"? 

i think we have QEIII, here, don't we? but as "smaller" US-side banks do the "swaps of $$$ for fecal matter" and american juice is transferred, openly and wholesale, to the NWO europeon masters and their puppets.  this is inflationary as heck, too, boy!  unless, of course, the expanding whirlpool of deflationary collapse just disappears our wealth via the pigpeople and their adorable piglet puppet nations which need "austerity" like a fuking hole in the head, but the idea that goobermints can balance budgets and just cut the pork & fat and govern apparently belongs to a future paradigm shift, b/c the idea has little traction, even on this site, where bloggers are actually quite heavily conditioned, politically, in diff ways, and ready to do actual violence to anybody who scratches their surface a bit and shows them for the robotic, untinking foolz they be

the economic "glitch" between austerity being the only legal remedy and being not the right 'economic' remedy for the keynesians is now being "addressed" but as nancy pelosi will sure appreciate, time is of the essence, so let's just cut the discussion and git 'er done for the puppet-masters, here, dammit!

the bullion banksters stand ready to buy all the PMs and paper PMs you wanna unload, here, of course, even tho they may be much more interested in "painting" our two majestic phyZical horses as "breaking" down outa certain channels and trends, here, technically.  that is what they do, and we are looking at how they do it in real time.  this is, perhaps, why most "technical calls" esp re the miners have fared so poorly over the last few years

again, i'm with you, not so much due to the nature of the casino (compulsive gambling from home in a socially-acceptable way for the OCD types who will, eventually, lose everything, as always) as due to the zombie/insolvent status of many of the "trusted" brokerages and/or their retail/commercial/bullion/venture&LBO banking and insurance branches.  please read your prospectus if you are a "trader" ok?

as we progress thru this insanity, cashing out or buying/owning PMs may become more & more "regulated"  so each person should think and act individually and prudently, depending on understanding and intuition

"protection" is paramount for slewie, too.  i gamble, but in casinos and online poker clubs and it's all cash, and a ton of fun w/ some great people

"price discovery" will only happen when the bubble du jour ('sovereign" debt) makes that tell-tale sound, which may have been temporarily averted in the EU long enuf for the "legislating" and political "majorities" to get the bonds and their reception (by china) up to speed, even as the cabal has gone public w/ their collusion and manipulation of everything monetary and "economic" (think hundreds, at least, of centrally co-ordinated PPTs for a fun few minutes!)...

...so that "investors" will have more confidence, no less!  which is really, terribly funny, isn't it?

Thu, 09/15/2011 - 15:33 | 1674352 Panafrican Funk...
Panafrican Funktron Robot's picture

Actually, it does.  Once you accept that the stock market and broader macroeconomic data are uncorrelated, you can ignore that noise and focus on how it actually moves, and profit accordingly. 

Thu, 09/15/2011 - 13:41 | 1674015 TzaristBondHolder
TzaristBondHolder's picture

not casino, a theatre.  In a casino you gamble knowing the house rules, here they change games and rules WHILE you are trying to place bets

Thu, 09/15/2011 - 13:10 | 1673860 anynonmous
anynonmous's picture

Rosie, which is it?  the seventies  or the thirites

Thu, 09/15/2011 - 13:11 | 1673864 kito
kito's picture

sign outside of fort knox now reads "we sell gold"

Thu, 09/15/2011 - 13:22 | 1673923 InconvenientCou...
InconvenientCounterParty's picture

that makes sense.

Why else would gold tank on the announcement of more debt creation and announcement of currency intervention?

It should be no surprise that gold is the "go to" asset when fiat fails. Selling and buying sounds like a real market.

Thu, 09/15/2011 - 13:29 | 1673952 moonstears
moonstears's picture

Saw it, too...but said "we BUY gold" (for the FED's stash, guarded by the US Army, thanks to FDR!), as I recall.

Thu, 09/15/2011 - 13:33 | 1673979 kito
kito's picture

no moonstears, you dont have this massive drop in gold when such bullish gold news comes out unless the fed and other cohorts are dumping into the market to prevent a run to the ultimate safe haven. they are dumping gold, pumping fiat into this news to keep fiat in the banking system.... 

Thu, 09/15/2011 - 13:43 | 1674025 Shell Game
Shell Game's picture

'they are selling gold'  Which? There are two gold markets, one they sell and one they vault. 

Thu, 09/15/2011 - 13:55 | 1674073 moonstears
moonstears's picture

Kito, my idea was to shed light on a possible theory, I've read, concerning WHO owns the gold in Knox. I believe that the hedges, individuals, etc are selling, FED/ CBs not so much. JMOs.

Thu, 09/15/2011 - 17:23 | 1674846 Toma Haja
Toma Haja's picture

My suggestion is that the drop in gold is the result of the inverse of Rosie's article on the short squeeze.  The institutional holders of gold are shorting it in order to buy it on the cheap. 

Thu, 09/15/2011 - 13:55 | 1674070 tiger7905
tiger7905's picture

Dylan Grice talking $10,000/oz gold, the idea of very high gold prices going mainstream...


Thu, 09/15/2011 - 13:59 | 1674084 Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

In very small print below main verbiage:  "if we had any":)

Thu, 09/15/2011 - 13:13 | 1673873 macfly
macfly's picture

I'm holding steady short, but wish I'd got in at these levels!

Thu, 09/15/2011 - 13:15 | 1673874 DirtMerchant
DirtMerchant's picture

The house ALWAYS wins...better to spend your money elsewhere, more enjoyment, less frustration...

BE the house, stay physical my friends!

Thu, 09/15/2011 - 13:37 | 1673999 Smiddywesson
Smiddywesson's picture

Excellent point. 

Physical will be the eventual winner. 

Physical has no counter party risk. 

You can't trade physical because it's, well, so physical.  Therefore, it's hard to scam you out of your position. 

Physical has no calories and keeps you in shape with all that digging.  After all, the #1 rule with respect to a zombie apocalypse is "cardio."

Thu, 09/15/2011 - 14:12 | 1674118 Bendromeda Strain
Bendromeda Strain's picture

Meh - bad joints, can't run. Which means Rule #2 is all important...  DOUBLE TAP!


Thu, 09/15/2011 - 13:13 | 1673875 xtop23
xtop23's picture

Its all well and good to look at past precedent but the game is different this time. You follow the rules learned from previous trends at your peril.

Thu, 09/15/2011 - 15:01 | 1674246 RockyRacoon
RockyRacoon's picture

I was just thinking the same thing.   All references to "past performance" are irrelevant.   The 1980s is certainly no clue to today's actions in the markets.   Maybe go back to the 1930s for some more relevant parallels.

Thu, 09/15/2011 - 13:14 | 1673877 HedgeFun
HedgeFun's picture

Love Rosie.  Clear thinking.

Thu, 09/15/2011 - 13:15 | 1673882 Belarus
Belarus's picture

Last September the market rallied 8%. So far, the market is still trying to recover losses for Sept. By the end of the montth, September will likely be another fantastic month. 

Remember, the market alwasy does what it supposed to do, just NEVER when it supposed to do it. If the NYSE short interest didn't scare the shit out of you, I don't know what would.

The market will indeed crash....but first it must fuck every soul alive. 

Thu, 09/15/2011 - 13:16 | 1673888 DirtMerchant
DirtMerchant's picture

if the market crashes and nobody is in it,  does it make a sound?

Thu, 09/15/2011 - 13:19 | 1673898 xtop23
xtop23's picture

 The sound of HFT computers having an orgy should make for quite the auditory assault

Thu, 09/15/2011 - 13:39 | 1674007 Smiddywesson
Smiddywesson's picture

The markets are designed to hurt the most people most of the time.

Bernard Baruch

Thu, 09/15/2011 - 13:56 | 1674076 Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

Good posts Belarus.  Words of wisdom.  Sometimes "stand aside" is the wise option!

Thu, 09/15/2011 - 14:24 | 1674156 Zola
Zola's picture

Short interest does not mean anything bullish, it is quite the opposite in a real market actually, high short interest means smart money is anticipating a decline and it is a bearish signal. Only in this casino where Shorts are specifically targeted by the ones who see the positions does that have the opposite effect. Finally you should check the short as a % of issues , when you have whales like Biggs who will puke massive amounts , a low short interest does not mean anything. The market has become deeply corrupted and gold is at this point the only answer.

Thu, 09/15/2011 - 16:04 | 1674507 Hugh_Jorgan
Hugh_Jorgan's picture

Don't forget that there are two Gold markets, and the price is based on the Ponzi paper market.

I LIKE to think that that this price drop is a combination of profit taking (after another significant upshot wasn't realized in the past week) and the shrewdest investors unloading paper gold in a coordinated effort. This motive is to drive the price way down in an effort to allow them to buy back into physical, but we'll never know.

Whatever happens, this move is very temporary. Price will resume it's rise before long.

Thu, 09/15/2011 - 13:16 | 1673886 buzzsaw99
buzzsaw99's picture

What a crock of shit. Time to go long.

Thu, 09/15/2011 - 13:19 | 1673901 Belarus
Belarus's picture

Don't, you simply don't know when the market is going to fuck you. When you don't know what cards are in the deck, you're a sucker to play. Don't play--it will treat you no different than Vegas, the longer you play the more you'll lose.

I'm barbelled right now: USD (I know, I know) and precious metals. Almost none in any bank or brokerage. 

Thu, 09/15/2011 - 13:25 | 1673936 Belarus
Belarus's picture

BTW, I'm following the late Benjamin Graham's advice on asset allocation. I'm 50-50 between cash and precious metals. Every time cash goes up to 55% because of precious metals tanking, I re-allocate back to 50-50. However, I never re-allocate from PM back to cash.....

Therefore, I'm 80% in PM's and only 20% in cash. ROFLMAO. Meanwhile, I'll wear the Dow 11,300 2000 hats for all the sheep. Oh.....wait, it's 2011!

Thu, 09/15/2011 - 14:32 | 1674179 IQ 145
IQ 145's picture

I guess this is a good place to remind you that I've told you over and over again that the huge short interest means the market is going up; and that I posted here yesterday, that I bought the S&P500 at 1182.7; so that's $5000 overnight and up ticking; also I posted why I did it and asked you to look at the S&P500 chart; attempting to teach. It's not my fault if no one listens.

Thu, 09/15/2011 - 15:27 | 1674333 buzzsaw99
buzzsaw99's picture

TSX + 1%

GS.TO - 1%


enough said

Thu, 09/15/2011 - 18:22 | 1675147 Astute Investor
Astute Investor's picture

so that's $5000 overnight and up ticking

What will you do with all of that money?  I guess a financially stress-free retirement is all but assured.

Thu, 09/15/2011 - 13:17 | 1673890 The Deleuzian
The Deleuzian's picture

I'm not sure contemporary comparisons shine much light on the current situation....More like the Roman Empire in fast forward a factor or three

Thu, 09/15/2011 - 13:17 | 1673892 monopoly
monopoly's picture

This post makes a lot of sense to me and we are on the same track.

Thu, 09/15/2011 - 13:18 | 1673897 lunaticfringe
lunaticfringe's picture

I don't need all of those bullet points. For me, it is far simpler. I think the member banks are positioning for QE3. I think they know it's coming, and I think this market is completely detached from reality and sick. I couldn't trade this thing with tyler's genius. http://thecivillibertarian.blogspot.com/2011/09/what-hell-is-going-on-wi...

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