EUR Soars Most Since October 2011 Greek "Bailout" Announcement: Here Is What Happened Next

Tyler Durden's picture


Today's 4-sigma short-squeeze ramp in EURUSD (up over 220pips from pre-Summit-statement) is very reminiscent of the 10/26/11 reaction to the Greek debt deal. EURUSD rallied magnificently, squeezing a dominating short-crowd over 400 pips higher that time. But it is the impulse reaction that we note - within two days, the entire rally had faded and indeed went on to sell off for a few more months as reality struck. One month after that previous last 4-sigma jump in EURUSD (late November 2011) we saw the global co-ordinated central bank liftathon that started the five-month epic idiocy of the equity exuberance that was the decoupling self-sustaining short-squeezing 'cleanest dirty shirt' first quarter of 2012. Trade accordingly.

EURUSD testing up to its 50DMA here as the 4-sigma move brings back hopeful memories from last October and November (and fearful squeeze nightmares)...

and here is how the EUR reacted to the Greek debt deal (a 400 pip rally) and then the hangover fade as all those shorts were burnt and the fundamental reality kicked back in...


and today's exuberance as shorts scramble...


Charts: Bloomberg

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Fri, 06/29/2012 - 10:55 | 2573258 DavidJ
DavidJ's picture

My EURO shorts hurt.

Fri, 06/29/2012 - 10:57 | 2573268 slaughterer
slaughterer's picture

I am waiting for the Merkel "NEIN" still.

Fri, 06/29/2012 - 10:59 | 2573270 Xibalba
Xibalba's picture

after qtr end...duh. 

Fri, 06/29/2012 - 11:46 | 2573420 NotApplicable
NotApplicable's picture

I think the chart should be labeled "Black Swan Dive."

Fri, 06/29/2012 - 11:20 | 2573320 EL INDIO
EL INDIO's picture

God damn, she could come out and say:


Fri, 06/29/2012 - 11:35 | 2573388 sockratte
sockratte's picture

indeed, nein can still come. the german parliament won't vote today on the changes (bank recapitalisation via esm) discussed on the eu summit. furthermore, the constitutional court has still to decide, whether esm and fiscal pact are consistent with the german constitution.

Fri, 06/29/2012 - 11:00 | 2573273 sockratte
sockratte's picture

yes. damn politicians...

at least, switched at a 1000 pips loss and regained some 800

Fri, 06/29/2012 - 14:45 | 2574109 cranky-old-geezer
cranky-old-geezer's picture



It's obvious now, these fits of hopium from summit after summit are thinly disguised EURUSD pump-&-dumps, which only benefit insiders of course.

Sorry I didn't recognize the pattern before now, but it's clear now. 

Expect more of the same.  When bankers can't make money from interest in a ZIRP environment, they resort to pumping & dumping markets to make money, what we can clearly see now.

Fri, 06/29/2012 - 11:12 | 2573298 AccreditedEYE
AccreditedEYE's picture

Hedge with some bank shorts. Big financials are getting taken out to the wood shed...

Fri, 06/29/2012 - 11:29 | 2573363 LongSoupLine
LongSoupLine's picture

Thank God they listened to Soros huh?!


Fri, 06/29/2012 - 10:55 | 2573260 SheepDog-One
SheepDog-One's picture

King Eurollar!!

Fri, 06/29/2012 - 11:07 | 2573261 Cognitive Dissonance
Cognitive Dissonance's picture

The Muppets are, if nothing else, predictable. I am (of course) speaking of the professional Muppets, those who run OPM (Other People's Money). Makes yesterday's late day market ramp even more interesting when viewed from today.....doesn't it?

The markets do not move. The markets are MOVED.

Fri, 06/29/2012 - 11:26 | 2573345 LongSoupLine
LongSoupLine's picture



Bingo CD...

Hmmmm, I just don't understand why we continue to bleed retail investors from this "market".

Fri, 06/29/2012 - 11:50 | 2573435 Ragnar24
Ragnar24's picture

And as Tyler pointed out, it was a $3.3B position -- not even disguised.

Fri, 06/29/2012 - 10:56 | 2573263 Popo
Popo's picture

'Guess it's a good day to get out of all those Euro accounts before this crap unwinds...

Fri, 06/29/2012 - 10:56 | 2573264 midgetrannyporn
midgetrannyporn's picture

These kinds of rallies ARE NOT bullish imo.

Fri, 06/29/2012 - 11:19 | 2573318 Marginal Call
Marginal Call's picture

A chain reaction of stops getting hit and pushing the market higher, and in the over night on squat for volume so their lucky to get filled even in the neighborhood where they're placed.  Yeah, hot air rally.


the 60 min profile for the ES tells the story. 

Fri, 06/29/2012 - 10:57 | 2573265 slaughterer
slaughterer's picture

Re-short EUR/USD @1.2750.

Fri, 06/29/2012 - 11:15 | 2573307 EL INDIO
EL INDIO's picture

I guess when if you’re sure you’re right , you must persevere !

Fri, 06/29/2012 - 11:15 | 2573308 DeadFred
DeadFred's picture

You're pretty gutsy. I see nothing to stop this medium term before it hits the high end of 1.29 to low 1.30s. Strong resistance is at 1.34. Short term is beyond me so enjoy.

Fri, 06/29/2012 - 11:22 | 2573324 hnaparst
hnaparst's picture

May be.   But you can sell a little bit all the way up.  Each batch should be so small that you feel it isn't even worth doing it.

Fri, 06/29/2012 - 20:47 | 2575144 fswalker
fswalker's picture

Your measly 100k positons aint shit to the market so why bother with small batches all the way up? Why not just rather wait till the rally is properly exhausted & put in a decent sized position with a good risk/reward ratio?

Fri, 06/29/2012 - 10:57 | 2573266 falak pema
falak pema's picture

the roller coaster always goes up and down wildly. So who cares, until it derails. 

Fri, 06/29/2012 - 10:58 | 2573269 mark7
mark7's picture

The lower eur-usd goes, the more it takes away from argument that PIGS should issue their own currencies and devalue.

Fri, 06/29/2012 - 11:02 | 2573275 Nachdenken
Nachdenken's picture

As foreseen yesterday lots of traders with wet trousers or shoes (depending on whether they trade sitting or standing). They can chase the trend now.

This is not a bounce, the turn will be encouraged by National Debt Management traders to maintain the illusion of unity and certainty and support within the Eurozone. 

Friday after the 4th of July celebrations could see a further push into higher ranges.  Thats MM market manipulation for as long as it lasts


Fri, 06/29/2012 - 11:04 | 2573279 The Duck Stops Here
The Duck Stops Here's picture

Makes sense now that EU is united in their insolvency

Fri, 06/29/2012 - 11:15 | 2573304 GeneMarchbanks
GeneMarchbanks's picture

Yet somehow we still trail the US in the race. We can never win.

Fri, 06/29/2012 - 11:24 | 2573336 The Duck Stops Here
The Duck Stops Here's picture

But they are trying their darndest to give the US a run for their money, Obama gets obamacare and they had to up the ante to try and keep in the race

Fri, 06/29/2012 - 11:06 | 2573281 eclectic syncretist
eclectic syncretist's picture

Individual company earnings and forecasts will put a sobering damper on these festivities soon enough.  This is just the denial stage.

Fri, 06/29/2012 - 11:07 | 2573283 Sockeye
Sockeye's picture

European Debt Union

Fri, 06/29/2012 - 11:11 | 2573293 francis_sawyer
francis_sawyer's picture

That chart would qualify as a Friday foto caption contest...

Fri, 06/29/2012 - 11:11 | 2573294 SpeakerFTD
SpeakerFTD's picture

Any news on the SNB's efforts to hold the currency line?   I guess today helps them out, but that kind of inflexible intervention seems like an obvious place to look for an eventual breakdown.

Fri, 06/29/2012 - 12:30 | 2573618 NooooB
NooooB's picture

Look at the charts man! last night SNB bought a shitload of euros. That is what this is all about...

Fri, 06/29/2012 - 11:13 | 2573299 Itch
Itch's picture

Every risk event has been sold for a long time now, looking around the markets today i have to admit i have my doubts about selling this one. There is also the fatigue element with the euro kicking in now, there will be many people wanting to take a good step back. Its happened many times before; things weren’t completely fixed but it rallied for months. Im long until the price tells me otherwise.

Fri, 06/29/2012 - 11:13 | 2573300 bullmarket
bullmarket's picture

Only one slight differnce bewteen Oct 28, 20011 and today. The US market had a tremendous run up strarting October 5. Today it's been basically down. Some context is always appreciated but rarely delivered.

Fri, 06/29/2012 - 11:13 | 2573301 EL INDIO
EL INDIO's picture


Thanks man.

Fri, 06/29/2012 - 11:14 | 2573306 GlomarHabu
GlomarHabu's picture

Each day for the past several years we've been treated to the MOTU manipulation of FOREX,DOW,S&P, and a host of variables in the big equation making up "the world economy" .

Each day we find, again and again, the constant in the equation is DEBT. Huge unmanageable DEBT with no end in sight. These daily manipulations will not save us from continuing down The Road to Serfdom.

Fri, 06/29/2012 - 11:15 | 2573309 knukles
knukles's picture

Fucking thing's still broken.
Nothing's been solved.
If "they", the Imperious Grand Technocrats were going to fix the Problem, they'd be addressing the Problem, not the symptoms.

"That weeping open shanker on your lips needs a new band-aid, honey.  That one's all soaked."
" Oh thank you kind sir, now we can kiss again"

Fri, 06/29/2012 - 11:23 | 2573330 DeadFred
DeadFred's picture

I salute your imagery. LOL

Fri, 06/29/2012 - 11:25 | 2573335 geewhiz190
geewhiz190's picture

lipper fund flows continue to show equity funds flows out. how anyone can hope to call this thing one way or the other is a waste of time IMHO. if you're in it, you've got to hedge it. if your out,relax a little and have a nice weekend.

Fri, 06/29/2012 - 11:26 | 2573342 Jack Sheet
Jack Sheet's picture

EUR rallies these days seem to be as transient as Warron Buphitt's erections.

Fri, 06/29/2012 - 11:27 | 2573351 jannewmx
jannewmx's picture

So, when will the broken clock get it right? I'm not even asking for a broken clock getting it right twice a day. Bears have been calling for a crash for so long it's about time they get it right at least once. Face the truth. The financial system might be a mess but it has miles to go before it crashes. The can is lighter than you think. It can be kicked down the road far farther down the road than any one of us can predict. It will not occur in this decade or the next. Relax and enjoy. All that stress will kill you.

Fri, 06/29/2012 - 11:36 | 2573390 Itch
Itch's picture

One thing of note is that EUR/CHF is not playing along in the slightest, thats strange, thats very strange.

Fri, 06/29/2012 - 11:44 | 2573417 Snakeeyes
Snakeeyes's picture

It did taper off. Markets realized that Spanish banks will simply "Die another day." That was all that was accomplished.

Fri, 06/29/2012 - 11:47 | 2573422 Splootch
Splootch's picture

what you were expecting...eur goes to 0 and made bunch of littles of you the next george soros?...dont worry eur will go back down but first it must allow me to close my long at 1.2800

Fri, 06/29/2012 - 11:53 | 2573453 Peter K
Peter K's picture

What's funny about the Euro rally is that the only way to save (and I use that term loosely) the Euro is by expanding the monetary base, i.e. QE. And the unsterilized kind. Sell Mortimer, Sell :)

Fri, 06/29/2012 - 11:55 | 2573454 Paul Atreides
Paul Atreides's picture

Funny thing is you could almost predict this was going to happen today by the comments yesterday evening, one troll started commenting that he shorted the EUR 100k and had all ready made 13k from it and everyone should do it. I knew instantly that the shorts were going to get murdered this morning, glad I am out of the paper ponzi casino completely but its interesting that you can gather that insight from analyzing the comments.

Fri, 06/29/2012 - 12:36 | 2573646 Itch
Itch's picture

100k is only $10 a pip, so he would have needed a 1300 pip move to get his supposed 13k. And, if he had of been 100k on margin at say even 50:1, he would have been snuffed out the minute he put the trade on, whatever the market conditions, thats like $500 a pip.  Either way, hes a terminal bullshitter. The only thing you learned from his comment was that people who talk about their trade sizes are 99% of time bullshitting, horribly. Same thing goes for people who try and advise you on how you should trade. Always, always, always ask to see their bottom line...its only then the real bullshitting starts.

Fri, 06/29/2012 - 12:05 | 2573458 Village Smithy
Village Smithy's picture

Short positions are as important to a healthy market "ecosystem" as long positions. Bernanke and the other arrogant CBers who don't really understand free markets have started a war on shorts but they will regret it someday.

No follow through yet today, that may be a sign that returns are diminishing rapidly.

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