At The End Of May NYSE Short Interest Soared To November 2011 Levels, Leading To Epic Short Squeeze

Tyler Durden's picture


Wondering just what precipitated the near-record short covering squeeze in the first week of June on nothing but speculation of a Spanish bailout (hence materialized, and proven to be a massive disappointment), and the latest Hilsenrath rumor of more QE? Look no further than the chart below: as of the end of May, the short interest on the NYSE soared by over 800 million shares, bringing the total to 14.3 billion, the highest since November 30, when the market was 6% lower. And since the street's repo desks were fully aware the market was overshorted from a historical basis for this price level, it would be very easy to initiate a short covering squeeze, kicking out the weakest hands which had piled in in the second half of the month. The issue is that now that these shorts have been burned once more, even as the market is once again tumbling, and there is no easy way to spook a liftathon when every offer is lifted regardless of price, the next attempt at levitating the market on mere speculation and innuendo will be far more difficult. At this point it is all up to the Fed: unless Ben delivers in 9 days, it may get very ugly. And of course there is the apocalyptic scenario, where Ben does hint at the NEW QE, and the market pulls a Spain bailout, ramping higher as a well-habituated Pavlovian dog, only to plunge. Because if the central bank is unable to lift the stock market, which directly and indirectly accounts for 68% of all US household assets... what else is left?

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Mon, 06/11/2012 - 18:33 | 2516234 francis_sawyer
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Well now we can put to rest the MDB & his Facebook longs rumor...


"Because if the central bank is unable to lift the stock market, which accounts for 68% of all US household assets... what else is left?"

MDB clearly needs to pony up & do some dollar cost averaging...

Mon, 06/11/2012 - 20:46 | 2516502 stocktivity
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Seriously.....what else is left? Great question.

Mon, 06/11/2012 - 23:01 | 2516857 RiverRoad
RiverRoad's picture

What else is left?  Why, gold of course: the glue that's holding the world together.  You hafta know the world will get around to remembering that little fact sooner or later. 

Tue, 06/12/2012 - 01:19 | 2517085 Michael
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Lawyers For Ron Paul Civil Rights (Voting Rights) Lawsuit FAQ

Mon, 06/11/2012 - 22:21 | 2516750 andrewp111
andrewp111's picture

Uncle Ben can always lift the market if he tries hard enough.  But why should he bother until September-October? Stimulus at that time will be better for Obama, and thus better for Bernanke's chances of staying in power until 2018.

Mon, 06/11/2012 - 18:32 | 2516235 Mordan I
Mordan I's picture

I bite my tongue at me Sir!

Mon, 06/11/2012 - 18:35 | 2516239 HD
HD's picture

68%?  I had no idea it was that high.

No wonder the market feels entitled to another trillion in QE after a tiny 8% pullback.


Mon, 06/11/2012 - 19:36 | 2516355 HarryM
HarryM's picture

Then it stands to reason that the market should melt down prior to the Fed meeting.



Tue, 06/12/2012 - 07:11 | 2517266 bdc63
bdc63's picture

that 68% number is not right ... I don't know what they meant by "indirect" exposure to the stock market, but in there lies the lie.

Mon, 06/11/2012 - 19:38 | 2516359 HarryM
HarryM's picture




Mon, 06/11/2012 - 18:36 | 2516243 Mordan I
Mordan I's picture

you do bite sir! your thumb?

Mon, 06/11/2012 - 18:36 | 2516245 Mike in Tokyo Rogers
Mike in Tokyo Rogers's picture

When is this bad movie going to end? I've been eating so much popcorn over these last 4 years that I now weigh over 700 pounds!

Mon, 06/11/2012 - 19:48 | 2516381 CharlieSDT
CharlieSDT's picture

You better get a couple dozen more buckets.

Mon, 06/11/2012 - 20:57 | 2516536 trebuchet
trebuchet's picture

yeah here come the REAL issues...


Have a look at this article outlining the German backed plan for FEDERAL EUROPE

Things are going to move RAPIDLY over the next couple of months

Mon, 06/11/2012 - 18:36 | 2516246 semperfi
semperfi's picture

"Because if the central bank is unable to lift the stock market... what else is left?"

Someone better get Mars on the phone.

Mon, 06/11/2012 - 18:37 | 2516249 HelluvaEngineer
HelluvaEngineer's picture

Let's see...famine...locusts...

Mon, 06/11/2012 - 18:59 | 2516293 semperfi
semperfi's picture

...human sacrifice - cats and dogs living together - mass hysteria!

Mon, 06/11/2012 - 19:33 | 2516350 Nobody For President
Nobody For President's picture

Perhaps it is time to legalize dope - not just mary jane but all of it, what the hell. Big goose to the market when all the cartels IPO, and if it busts - your drug of choice is near at hand and all legal. Why be restricted to booze?

Mon, 06/11/2012 - 19:50 | 2516390 The Gooch
The Gooch's picture

I would hedge that the "cartels" are the true definition of TBTF. The fence just doesn't work. Cartelbook.

Mon, 06/11/2012 - 20:19 | 2516448 IAmNotMark
IAmNotMark's picture

Sorry...the only reason that drugs are illegal is all of the money being made.  Law enforcement, lawyers, judges, prisons,...  that's a lot of cash flowing.  Plus the whole power thing.  Making citizens into subjects.  The War on Drugs has been a huge success if those are your metrics.  Legalizing it?  Wow.  That would end a lot of gravy trains.

Mon, 06/11/2012 - 20:43 | 2516496 bshirley1968
bshirley1968's picture

Yeah! A bunch of government suits and "heroes" with badges would have to live off welfare or go get a real job.

Mon, 06/11/2012 - 21:46 | 2516657 decon
decon's picture

Same with wildland firefighting on public lands in the west.  Huge gravey train for fed employees even though about 80% of the plant communities coevolved with fire.

Mon, 06/11/2012 - 18:37 | 2516248 hedgehog9999
hedgehog9999's picture

Today was SPX 's longest down candle since the recent top at 1417 or so.., it does look like wave 3 down is just starting FACEBOOKING all those believers in Geithner, Garzarelli, and the french broad from the IMS along with the now Subordinated Spanish guys pontificating their bailout ....................


Mon, 06/11/2012 - 18:39 | 2516255 HaroldWang
HaroldWang's picture

Was quite a large candle and should signal more downside but headlines prevail. We just go this:

Barroso proposes further E.U. bank integration: FT

Futures came off their lows and went green quickly.

Mon, 06/11/2012 - 18:49 | 2516273 hedgehog9999
hedgehog9999's picture

Wave 3 down baby for all us shorts!!!! 

a long candle like this indicates a major change of trend, ominous indeed as it happened after a textbokk ABC correction upwards.


Mon, 06/11/2012 - 18:40 | 2516253 RationalPrepper
RationalPrepper's picture

I'm a dunce...but I think the Fed disappoints this month.  Maybe they extend Twist, emphatically and redundantly preach ZIRP, and try and jawbone the market again by promising they "won't hesitate to ease if necessary."  The market will then show them how "necessary" it is and they're printing later this summer or early fall.  Rinse...wash...repeat.  Until even helicopter rides don't work anymore.

Mon, 06/11/2012 - 18:55 | 2516285 you enjoy myself
you enjoy myself's picture

agreed - its just going to be more jawboning.  which of course might be sufficient for a 1-2 week squeeze.  but there's no way the Fed is blowing up its balance sheet even more at this stage.  EUR is doomed, yes, but it hasn't blown up yet.  oil is still too high.  SPX is still too high.  interest rates are still too low.  QE'ing has had 3 years to have the slightest effect on employment or lending - it didn't.  what possible rationale can Ben offer now?  yeah, its always been about giving the banks a free carry trade and finding someone to buy our bonds, but he at least was able to pretend there were other legitimate reasons.  those are gone now.

Mon, 06/11/2012 - 19:16 | 2516311 Rainman
Rainman's picture

Obeyme is kicking on Merkel to make the print, which she ignores. You think the blamer-in-chief ain't got his foot up Ben's ass to print too....?? Hell yeah !

Mon, 06/11/2012 - 20:33 | 2516471 you enjoy myself
you enjoy myself's picture

didn't mean to say he wouldn't - there's no other play in his playbook.  he's just not going to do it 9 days from now.  because QE-lite will do absolutely nothing apart from make monetary policy a campaign issue.  either Ben goes big or he doesn't go at all - no one is going to tolerate perpetual QE, so QE 3 better count.  and you can't justify going big when oil is $100, SPX is 1300, gold at $1600, 30-yr mortgages are below 4%, and unemployment is "8.2%"

crap needs to fall apart at least a little bit first.  you can't unleash a $2T LSAP when the only stated purpose is to wealth-effect your way to SPX 1700.

Mon, 06/11/2012 - 22:24 | 2516754 andrewp111
andrewp111's picture

Uncle Ben will buy 5 Trillion worth of  MBS and European debt in October. Until then it is just jawboning and window dressing.

Mon, 06/11/2012 - 18:40 | 2516256 Mordan I
Mordan I's picture

I bite as a dick does bite apon that what it can.

Mon, 06/11/2012 - 18:42 | 2516260 Mordan I
Mordan I's picture


Mon, 06/11/2012 - 18:42 | 2516261 Dapper Dan
Dapper Dan's picture

The elite are planning for a major exit, or ........................??????

CNBC tweeted:

Berkshire Hathaway's NetJets places $9.6B order with Bombardier, Cessna for 425 new aircraft, the largest private aviation order in history.
Mon, 06/11/2012 - 19:13 | 2516287 Paul Atreides
Paul Atreides's picture

Large airlines are going to have a difficult time with operating costs very soon...

Mon, 06/11/2012 - 20:00 | 2516413 booboo
booboo's picture

And I have a star named after me, taking delivery is another story. Just more hopium for the dopiums.

Mon, 06/11/2012 - 20:50 | 2516515 stocktivity
stocktivity's picture

How much did that cost you and what company did you pay that owns all the stars? Just curious.

Mon, 06/11/2012 - 18:45 | 2516266 news printer
news printer's picture

Peter Schiff testifies before the House Financial Services Subcommittee on Insurance, Housing and Community Opportunity. Hearing entitled "Oversight of Federal Housing Administration's Multifamily Insurance Programs." Thursday, June 7, 2012 10:00 AM in 2128 Rayburn HOB.


Mon, 06/11/2012 - 19:25 | 2516328 WillyGroper
WillyGroper's picture

Wow, what a turnout from the elected reps!

Mon, 06/11/2012 - 18:50 | 2516276 fonzannoon
fonzannoon's picture

So here is my problem with this article. It seems that it has been made painfully clear for a while now that the regular retail client is long gone from this maket. That is illustrated through outflows (weekly) and volume (constantly). So how is the stock market accountable for 68% or household assets? What am I missing?

Mon, 06/11/2012 - 18:59 | 2516296 hedgehog9999
hedgehog9999's picture

I think that 68% figure includes bonds and represents workers pension money to a large extent.

Mon, 06/11/2012 - 20:29 | 2516468 Zero Govt
Zero Govt's picture

Yep, can't imagine in my wildest dreams US households have 68% of their assets in stocks ...most of it is in property and the rest is a bit of cash in the bank and something, not much, in a pension (get it out asap you fools!!)

more manufactured figures, were they from Liesman on CNBC ?

Mon, 06/11/2012 - 20:32 | 2516480 fonzannoon
fonzannoon's picture

If it's about the pensions and that is a great point, a lot of them are not lump sumable or beyond the participants control. So thats scary.

Mon, 06/11/2012 - 21:07 | 2516564 LawsofPhysics
LawsofPhysics's picture

Be sure not to confuse "pensions" with 401ks, two completely different things. Very few people actually have a pension.

Mon, 06/11/2012 - 21:07 | 2516563 FearLess_FLY
FearLess_FLY's picture

fonzanoon... I too wonder about things. Article talks about all of the "shorting" going on. A question to Tyler : How come I cant find out about the shorting statistics until AFTER the fact? Where can I find this info direct ?

Mon, 06/11/2012 - 18:51 | 2516278 100pcDredge
100pcDredge's picture

Ehm... Nespresso?

Mon, 06/11/2012 - 18:55 | 2516282 Mordan I
Mordan I's picture

I shot the sheriff  ... but we did not Marduk the

Mon, 06/11/2012 - 18:57 | 2516284 razorthin
razorthin's picture

This is precisely what I have been saying to those who doubt QE.  This is it folks.  Italy is next.  No Fed action soon and it is over, finito, lights out - and very quickly.  Of course I wouldn't shed a tear.  In fact, I think things could get crashy well before the June meeting...I suppose being precisely what many believe it would take for the Fed to act.

Mon, 06/11/2012 - 18:58 | 2516290 evolutionx
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