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EUR Shorts Surge, Back To 17 Month Highs As Bearish Sentiment Returns
So much for the short covering squeeze in the EUR. After eeking out some modest purchases in the EUR in the weeks leading up to November 8, with the interim peak in net sentiment hitting a transitory high of -54,257, the three weeks since then have seen yet another major spike in bearish EUR sentiment, and as of minutes ago the CFTC's COT report indicated that net non-commercial spec shorts surged to more than -100,000 for the first time since June 2010, or specifically -104,302. Granted this is as of November 29, so before the Fed's FX swap intervention. Yet considering that the EURUSD is rapidly filling the gap to Wednesday, we would not be surprised if all the Fed managed to do was to force a handful of specs to cover their short positions. Nonetheless, this does confirm that the EURUSD continues to act like a tightly wound coil, and any credible resolution to the European crisis will result in the biggest short covering squeeze in the EUR in years, sending both the currency and its S&P 500 derivative soaring. Now the question remains: does a credible resolution exist? The irony is that the only real solution is the ECB printing. Yet for the first time ever in monetary history that announcement of the the ECB's dilution of the European currency will actually send the currency surging, due to the technical unwind of the shorts overwhelming the fundamental weakness of the currency. Granted, it will be a transitory response, but who really can predict the long-run these days anyway?
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Thanks for pointing out that obvious conundrum - ECB prints but hey! EUR goes up against USD!
Whiskey. Tango. Foxtrot.
And markets are rational.
They are all printing now, and at the same speed, hence the coordinated move of all Central Banks to use the Fed's interest rate.
EUR/USD to stay pegged at $1.35
DXY to stay at 77.
But they will be falling together. How will you know?
A dramatic rise in the price of gold will tell the tale.
Hey, that's actually an interesting perspective..
smartest choice. keep shorting.
http://covert3.wordpress.com
http://expose2.wordpress.com
Overlay that onto a chart of USD/EUR and the correlation seems high to me, I can't overlay it exactly but the dates for highs and lows kinda match up over a month. Having said that TD was right about last months EUR squeeze causing a meltup in the SPX derivative.
It is pressure tactics to get Eurobonds done. Just a matter of time before Merkel relents.
ON AN IMPORTANT AND RELATED NOTE:
The 'Republican Jewish Coalition' has declined to invite Ron Paul to their nationally televised debate on Dec. 7th. Apparently, Paul is 'misguided' and'extreme'. More here: http://www.infowars.com/republican-jewish-coalition-bars-ron-paul-from-d...
You can email the RJC here: rjc@rjchq.org
And you can reach their ladies' group here: Women@RJCHQ.org
well, he's not a jewish doctor
3,2,1... Que the trolls comparing ZH to Stormfront...
ty4theheadzup
Doesnt matter what they think, fair and equl time needed for debates. Discrimination from jews is discusting.
At least they didn't fail spelling in the 3rd grade.
I do think that RP should get more than equal time because he's by far the best candidate and discrimination by anyone is 'disgusting.'
Maybe if Ron Paul was more like Rick Perry...
http://www.youtube.com/watch?v=IYYtE42bddQ
Where did Robochump's rally go? I see the DJIA and S&P 500 both closed in the red.
Note to ZH: Robochump's character has grown stale. If Robochump is going to stick around to stir the pot, at least bring back the saucy T&A photos Robochump used to post.
the margin was raised on his practice account! he went loco!!!
He certainly got quiet.
That sure didn't take long. The half life of each successive central bank action gets shorter and shorter.
Burn already.
While everybody and their aunt is calling for more upside potential in US equities, I'd like to remind my fellow ZH-ers that the recent S&P rally stopped right around the 78.6% fib retrace (1260) of the move down from 1292 to 1149.
Just. Sayin'.
Huge selloff in gold and silver today! Right in the beginning of US trading. Wonder how financials were up today? They sold some holdings and hit the short button.
Now that gold is gaining momentum and volatility, look for bigger price swings on the way. We should hit an apex point in the coming weeks (we may have hit it today, as evidence, the Dow was flat) that widens its spread, and sends it back to $1900, before the winter equinox.
Mr LH, regarding your musings... I KNOW! But... what's up with this $1750 ceiling?
TD, new kid in town, ok to link here?
http://blog.milesfranklin.com/contagion
"...capping of gold at the equally KEY ROUND NUMBER of $1,750/oz, tied together by the “Dow, Gold x 2 algorithm,” which ensures gold’s directional correlation with the Dow remains 100%, albeit with gold rising at ½ the rate of the Dow but falling at 2x the rate. I’ve been watching this ALGORITHM for more years than I can remember, and until the Cartel is broken it will NEVER stop. It’s just THAT important for TPTB to create PERCEPTION that gold is not a safe haven – i.e., it CANNOT be allowed to rise when equity markets are falling sharply, or alternatively when highly inflationary fiscal or monetary policies are unleashed, as we saw yesterday."
Can you, or anyone enlighten me as to whether this is a credible take? If so, how long can this go on?
Thanks in advance,
beachdude
Dude- Get off the beach and pull up a couple of charts. Five years ago, gold was $600 or so, while the DOW was higher than it is now. So gold has almost tripled while the DOW went nowhere with much sound and fury.
It's true that there is correlation between gold and stocks something like the guy says, but only on a short term basis. It does appear that they are trying to dissuade people from investing in the metals. In the long run, though, it is not true at all. Gold takes big jumps upward that are difficult to time with a net result that it is by far the winner over the past several years.
What, you mean slightly cheaper dollar swaps didn't solve EUR's underlying, fundamental insolvency?
Gosh, you just need to check the Dow this week, don't you?
what does Merkel really mean with "No" to Eurobonds?
No Eurobonds – no euro
According to the EU monetary chief, the eurozone may only have a few days left to find a way out of the crisis. But economic analyst Michael Mross believes that Germany would rather let the euro die than support the idea of Eurobonds.
http://www.mmnews.de/index.php/english-news/8997-no-eurobonds--no-euro-
So, we fill the gap in EURUSD, S&P makes retest of the 1205 area breakout and then we get the squeeze of all time.
SP500 bull vs bear battle reverts to bearish bias after price action on Friday and more downside expected.
My long term indicators have continued to warn of US Dollar strength and EURO weakness and these signals have increased since 2009. The overdue dollar rally should be substantial.
http://stockmarket618.wordpress.com