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Forget The NYSE Shorts, And Be Very Afraid Of The Resumption In Bearish EUR Sentiment (And Squeeze)
Just when one thought the oversold status of the all important Euro (by way of the market defining EURUSD) may have peaked and short covering resumed, we once again find that the technical reason (not to be confused with the fundamental one which has to do with EUR repatriation by French banks) why the EUR continues to melt up, and drag all 1.000 correlated assets along with it, is that after a brief retracement in mega bearish exposure in the currency as of last week, bearish sentiment once again returned, and after 8,902 net short non-commercial contracts were covered in the weekend ended October 11, the subsequent most recent week saw another 3,925 net shorts added according to the CFTC's COT report, bringing net short exposure back to near 2011 'highs' at -77,720 contracts. This is, to put it mildly, disturbing, because while stock pundits look at NYSE short interest, in this day and age of ultra low volume and liquidity algo trading, the only real transaction occur on the uber-levered margin: i.e., the EURUSD, where one pip delta translates in roughly 2 DJIA points. But it is explicitly disturbing because while the EURUSD has just closed at 1.39, or the highest (resistance) level since early September when the pair broke down, the net short interest now is well over double when the EURUSD first traded at this level.
Said otherwise, the squeeze can easily continue once the weak hands throw in the towel and force another major short covering rally, which drags the stock market with it. That is of course, unless reality finally manifests itself, the market realizes that all European bail out plans are unmathematical hodgepodge, and the EUR trades down to its fair value somewhere well lower (at least until the Fed's threats of MBS QE become reality). Then all fiat bets are off.
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All i know is, i was really glad today to see some funds in my trading account ... first dividends from Russian gold explorer/producer Highland Gold. The rest of it is dire.
Any new deal to shore up the euro-zone likely won't be enough to relieve pressure on the region's sovereign ratings, though France's AAA stamp is safe, a top executive at Fitch Ratings said.
--Euro zone ratings set to remain under pressure, even if a deal is agreed
--France's AAA is safe, no plans to change
--US lawmakers need to cut spending to avoid a negative outlook
Bwah, Fitch is French owned.
S&P will donkeypunch France into oblivion. It all goes down soon, literally.
Indeedy:
France Likely to Lose Top Rating in Stressed Economic Scenario, S&P Says, 21 October 2011, by John Glover (Bloomberg) http://www.bloomberg.com/news/2011-10-20/france-likely-to-lose-top-ratin...
The market knows what the rating are. Fuck the agencies, they are irrelevant.
and, according to a euroland official, could be subject to banning in the case of bailed out nations. next up, official banning of reality. oh wait ....
went to get the citation and i see it right below and hours earlier. oh well, it sure does crystalize official thinking.
EU to ban credit ratings
http://www.guardian.co.uk/business/2011/oct/20/downgrading-countries-in-...
And I thought I was alone
Yellen wants QE3. If that becomes a topic over the weekend all (EUR) bets are off. We might even breakthrough 1.40 if the QE3 rumors and their derivatives take off in earnest. I'm lost, I'll sit out for the weekend and pick up Asian session Monday.
QE3 will happen, but probably early 2012. I think it may be timed with an ECB QE in order for the exchange rate to remain more or less put, and not panic the masses.
The Nancy Libtard wants more Keynesian QE? Never saw that coming. /sarc
"That is of course, unless reality finally manifests itself, the market realizes that all European bail out plans are unmathematical hodgepodge, and the EUR trades down to its fair value somewhere well lower"
Well, then we know what the answer is don't we?
Reality to be suspended infinitely - BTFD.
New World Order: Leverage the shit out of everything....live the hi life....party and spend....hubris and excesses...don't fight it like peeps here on zero hedge....accept the inevitable of death by gluttony.
I see no reason not to be short something which is fundamentally overvalued. As long as the game continues, and the Euro continues to rise, I will remain short. IMO any further increases are just a delay of the inevitable and create a higher point from which to profit. 1.40 looks sweet, 1.50 sweeter still. Squeeze on that dollar bears.
I agree. I wouldn't advise anyone to go heavily short at any point (unless the news demands it) but each move we make upwards you should consider a small increase in your short position. I added to my SPXU and SQQQ position today. If we continue the ramp up, I'll add some more. Unless we get QE3 tomorrow, the market is going to plunge at some point.
Don't we already have an additional 400 billion of QE coming into the system? QE3 is already happening. What am I missing here?
It's a good way to blow out margin account. Two rules in market that can work: when trader comes on blog self-satisfied for losing prices, run in opposite direction. Or when RobotTrader bragging from bottom or top, also run. You see these both conflicting right now. This guy above can't wait for better shorts price and Robot brags about big long.
Dollar cost averaging works with patience, not every rise is to short. I know most here know this but have to wait week before add to positions sometimes ten days. Someone say the market goes up 70 percent of time, I don't know if true, but careful investor finds out and only takes long positions adding at every plunge.
only takes long positions adding at every plunge
pleanty of those buying opportunities comming right up.
Fundamentally overvalued relative to what? The US Dollar? Is it possible to fundamentally overvalue something against the US dollar (even if it's comparing confetti to confetti)? This is a competitive devaluation game, do you really think Bennie is going to sit on the sidelines and let Europe win this one? You must be completely fucking crazy, living under a rock, or just flat out retarded. Weak dollar = ramped /ES. The end.
PPP for EUR/USD is about 1.35 so we are seeing very minor moves around this level actually?
PS. The BIg Mac index no longer works so this does not apply to buying a Big Mac in Paris. Not that anyone other then "The Accidental trader" would actually WANT to buy a Big Mac in Paris?
wake me up when this is all over
Why? You'd be alone.
When the EFSF comes together, Greece defaults, and the banks are bailed out, then the scare will be over and the Euro will rise. The USD is deteriorating at a scary pace. QE3 is going to be announced in a couple weeks with the purchases of MBS. That refi program is coming shortly. And that's just what we know of. I can't wait to see a surprise come along.
Anybody know the yen net long/short position size?
Japan May Spend Extra $52 Billion to Cope With Yen Gains, Documents Show, 20 October 2011, by Kyoko Shimodoi and Toru Fujioka (Bloomberg) http://www.bloomberg.com/news/2011-10-20/japan-may-spend-26-billion-countering-yen-pain-document-shows.html
Honestly if the EU clowns find the way to permanently kik the can down the road as US does with deficit, I see no reason of holding US$. Reason: Many bmw's and Merced on US roads but non American cars on Europe roads.No serious manufacturing except gadgets called Apple.
Excellent point. Same thing here in China too: lots of German cars on the roads, but precious few American ones. The taxicab I rode in the other day was a Fiat. Gotta be Euro-bullish when the Chinese cab driver chooses Italy over the States--there're just too darned many of 'em.
LOL .. GM and FORD are both in top 10 for world wide auto sales (outside US). BMW and Mercedes arent even in the top ten ...
been short since 1.40, continue adding in this "rally", looking for 1.20 minimum
Time to scoop up some more silver...physical that is bitchez.
Not to sound like Dennis Gartman but I'm buying gold with Euros on this melt up.
My favorite part of this charade is I think we had the shortest bear market in history. Are we going to have confirmation of a bear market and bull market within three weeks?
And we go spinning, spinning, spinning, round and round and round. When we get off nobody knows.
Never was a bear market, only a correction.
When we broke down to new lows and took out all support, I was leaning towards a re-test of the March 2009 lows if the acceleration continued.
But this looks like a repeat of Summer 2010, just another huge fakeout engineered by the PigMen.
Here's the shocker: SPY is only down about 10% with the worst economic conditions in 75 years, the worst financial crisis in Europe in 150 years, and weeks upon weeks of people selling equities and buying bonds.
What happens when things improve and money starts leaving bonds and fleeing back into stocks?
You never said we would test March 09 lows you just talk about gold. You post the same idiot trool food on the bear forum. The mens restroom needs cleaning at your branch.
"What happens when things improve and money starts leaving bonds and fleeing back into stocks?"
If it hasn't happened by now after trillions of taxpayer money to prop up the markets, it never will.
What happens when things improve and money starts leaving bonds and fleeing back into stocks?
Hell will freeze over, and pigs will fly.
38 consecutive days with -1000 TICK readings, a new record.
http://stockcharts.com/h-sc/ui?s=$TICK&p=D&yr=0&mn=6&dy=0&id=p37322057532
Surprises are going to be on the upside.
For example, somebody "made their year" already, if they were fully positioned in Harman International and Seagate Technology, up 20% and 28% respectively today alone.
And some dumb ass blew their account up going long @ 12700 on dow and buying bank stock for last 6 months. Oh I forgot you never post trades just rear view mirror 15 min
Don't blame you for being angry. You have probably been on the wrong side of the market for weeks now.
Most guys who were short the Euro, short U.S. equities, and long bullion and/or gold stocks have been summarily executed and have seen their trading accounts vaporized.
Amen ... vaporized is a good term
I am not angry. I had my best year ever. I made my year on ZSl. please post some trades so we can fade.
L0L!!! tyler: all fiat bets are off!
weak hands? we're taliking fiat and fat-fingered FX follies & madness!
sell the 30-year! buy railroads?
we don't want to get summarily executed, again!
that robo_T is long on vapor, BiCheZ!
Don't bother responding to Robo. He only trades after the fact, never before. The best Monday Morning QB ever on ZH.
Ok, let's test Robo girl at little bit.
In 1 week, where will SPY be?
I say 116. Robo?
Very good. You picked up on what i like to call hindsight trading, or myth trading. Notice how the stories contain all of the loosing bets as a group, which is regurgitated when the market reverses. Always on the right side of the bet. ;) Retards are funny like that..
timbEUR!!
the eurotard bear raid makes sense. the eurotard mucketty mucks are too busy meddling in the sovereign bond markets and worrying about future bank bailouts and banning financial shorts to defend the broader stock markets. the bernank is too busy funneling money to his criminal cohorts to give a flying fig. even true believers are exiting the euro and buying usa treasuries or else buying german bunds.
http://campaign.r20.constantcontact.com/render?llr=nid4i7n6&v=001zHmPEHN...
See ZH post, earlier today.
Why worry about reality? This pig Market is just a gaint video game where first blink loses.
Like 'reality' has a value.....
I wound up the old grandfather clock
it will run for weeks without stop
the Euro may tank
before the clock needs a crank
and our pockets will be the world bank.
hickory dickory dock
janet was yellen
abby was swellin'
i wouldn't let either
suck my cock
bitchez
U crack me up, Buzz!
LOL!!!
Don't worry I only like bull dykes like Napolitano...
there is no short or long in currencies, what you see as short EUR/USD is a long USD/EUR
Briilliant point, and immensely important.
Every time I hear talk of "the dollar crashing," I ask, "against what?"
Pretty basic stuff, really, but a lot of people never seem to get it.
Can someone translate this in to stock market sentiment for an idiot like me? I´m massively short the Stockholm index due to my firm belief that the weekend summit will totally break down...
What it means is that this weekend machts nicht. Word is already out to not expect anything, hence the Wed. meeting.
The spice will flow, eventually, as soon as the raping accumulates enough.
I dunno... Today the market behaved like Jesus was returning come monday...
They might just be yelling his name Monday morning in the pits.
How many billions does he manage?
Ask his manager from Goldman, he's the one doing God's work.
Have you actually read the Bible? Jesus isn´t very keen on bankers...
Thats what I´m hoping for... Took shorting a bit far today.
Wonder why the ATM displayed 'cash is not available at this ATM at this time' at WF this morning at 10am?
Main branch for the area, btw.
Just as an aside to Libtards out there, why are water filters such a big market since the Clean Water Act?
Would love to hear some explanations for that.
Robo Cock
WoNt these moronic hedge fund who shorted because everybody else is get killed now that the great Bernenke is giving hints of QE3?
No matter reality the truth of the matter is the markets are basing and stabilizing above October lows. They are not crashing, and some modicum of trading appears to be moving to the forefront. Now If the above holds true you know Mickey & Minnie mouse will be all over the European airwaves spewing forth never ending bullshit about how we will solve all the debt and sovereign problems of Europe, just be patient and trust us. I hate to say it guys but just the two of them walking towards the castle, with all the little elves singing, balloons flying high, smiling amongst the cheering throngs of little ECB leaders will be enough to stoke the Euro, kill more shorts, and dive the dollar....again. Rinse, repeat, rinse.
I have a good trading associate much smarter than i am who has been trying to short this market for the last 2 years and it just has not worked well. He just will not stop knowing the truth as he does. Makes no sense to short a broken market. Now a real market, longs and shorts can make money. But in this market both get tossed under the Big Bus. Just not worth it.
So, miners, ouch sometimes, physical, a little oil and gas and confetti. At least with miners we are dealing with companies that have real earnings. Sure there are busts, AEM a perfect example this week and that one hurt me a bit, but it is part of the process. As long as we keep hearing the truth here, no matter what the markets do short term, at some point "The crash heard round the world" will be talked about for decades and we will be ready. But that is a way off and I could see this insipid rally continue on into the New Year. Honestly, the longer it takes, the more physical that can be stashed.
This market and I get along fine except for the somewhat frequent slap in the face my miners give me, and Not shorting has helped quite a bit in keeping my sanity. And most important.....THANK YOU ZERO HEDGE.
Time for the garden.
Right, basing. On a fluffy cloud of Hopium.
Triple digit daily moves are 'basing'. Ya, free-basing, as in Bercrack crack! It is technically meaningless.
There is no price discovery anymore! It's fukkin roulette, and if you never threw 5 on 00, you need out!
The good part is that you don't have to be raped by TSA to participate.
(Not a rant against you, mono - damn had that once. Just the dips that don't get the game. Like the moron that splits Kings.)
The year end report on SNB's balance sheet should reveal some interesting information. Oh i can't wait!
(Like it will be informative. Or true.)
That is of course, unless reality finally manifests itself, the market realizes that all European bail out plans are unmathematical hodgepodge, and the EUR trades down to its fair value somewhere well lower (at least until the Fed's threats of MBS QE become reality).
Well, the good news, we will know what reality will look more like on the 23rd and Wednesday. The market will not let said plans kicked down the road: see EU bond yields, ECB bond buying, banking liquidity, etc.
So, boys, we'll whether this storm and come out as hated as ever. Someone was said that, and just so.
Does this not suggest that there is a rake of repatriation to come and that the repatriators are nervous about sudden downdrafts in the euro? (So are short as a hedge until their repatriation date).
How does the following scenario work out for ya..
The market has been long EUR since the rally began in June '10. Net spec positions reached an all time high Jun-Aug '11 and a sharp correction to the downside was initiated, taking out stops and most net spec longs along the way. With negative news pouring out of europe and majoritiy of players now heavily net short its time for the USD rally to reverse and take on its original course of a race to the bottom. Goldman was right with their original call of post EUR/USD 1.50 however even they got shaken out by this corrective / stop-hunt move. Luckily there is still competition between the big boys as well.
Take note that the breakdown of this pair was initiated without any major stop-hunts to the upside, those in control dont like to leave money on the table in the event of a true reversal.
Now with the market / news corps pushing negative sentiment left right and centre, every man and his dog will be looking to short this pair.
Analysing this pair from a liquidity providers point of view sheds a different light though.
I trade udn, and not the euro, but we are at last at teh real resistance. udn should get to either now, or 28.37. but the gap up today for currencies was huge and the gap needs to be filled. it should at least come down to close to yesterdays low. but that was a good trading bottom using speed lines (my favorite)
Benny and the Eurojets play the currencies off each other to obscure the fact they are both confetti. Euro plunging as reality sets in? No prob, Fed hints at QE thus making the dollar more confetti like for a while. Euro gets stronger and allows Euro-tarp. Euro then plunges but not for long as the Fed rolls out more QE.
The relative exchange rate of the Eur/USD could remain more or less stable even as the world sinks into depressionary stagflation.
All I can say is that the EUR is the lead sled dog of the "Risk On" trade.
If the short interest is as high as Tyler says it is, then if the EUR gets another huge squeeze, that is going to send all Risk Assets of every type, race, color, sex, and ethnic origin up on another big ramp.
Afterwards, the "Pattern Recognition" Algos will recognize this as one huge, giant, shakeout and everyone will have to switch from short to long.
Who knows how high we could go after that.
And it is no accident that something like this could happen immediately after:
1) Dire forecasts on the Eurozone week in, week out.
2) Maniacal panic selling every day for 38 days, evidenced by huge negative TICK readings
3) 2-year high 21-day Put/Call ratio
4) Every Riverboat Gambler trying to make a fortune buying VXX, TZA, FAZ, etc.
5) European and Asian stocks driven down so far, the dividend yield on EFA is now 4.3%
6) The entire financial sector left for dead on fears of 2008 all over again.
7) Shipping, Solar, and Precious Metals stocks sitting at multi-year lows, also left for dead.
Lots of negativity in the markets right now.
However, there was no panic, at least not enough. Everyone is waiting for the other shoe to drop.
Reading Robotrader posts when you're high, he just seems like he is trying to troll us, not stating realistic,serious posts. Seriously...
yeah that's why i'm watching beer league
The crisis has to exceed the Troika's capacity (France at risk, Germany not going to carry all of it) before the G-20 can be brought in. The IMF will bridge the transition.
GFSF
G-20 back stops France. Greece confiscated.
Relax. The upward surge is about over. There is not going to be another huge rally. We have about another 200-300 points on The Dow and that's it. The short squeeze is done. We will begin a short program during the early part of next week now that most doom traders are wiped out. That's The Word on The Street;)
Okay, I thought I was done for a day, but I can't stop thinking about all this. And what's on my mind is simple: sure the market can rally next week. But that is not my predication. In the last three weeks it's been easy for the dog (EUR/USD rise) to rally stocks (short covering with ALGO ramp on dollar weakness). A lot of factors have worked for this trade, not least of which the rumors after rumor of fix-all plans and mild implementaion of ECB buying bonds, EU taking recap of banks serious, and liquidation and scramble for euro among banks. And to top all this breathtaking bullshit yet bullish news off for the EURO we've got the Fed saying "we may do more easing" and so assets reacted as all QE assets finally did well today (ahem, Gold and Silver, etc.).
But first, there is no LSAP YET (so don't worry about missing alpha, you still can buy silver for god sakes at depressed prices when it obvious they will monetize). To get there, LSAP'ing, the Federal Reseve must not only know how much they will need to do but they neeed a significant reason to do it: and make no mistake, they don't know and won't know how much either until the Summit Details come out.
Geitner said no to IMF additions for now (unless needed). I think he knows damn well it's going to be needed. Second, if and when the IMF gets funds with bailed-out U.S. taxpayer funds, assets willl have to get a really ugly. And they will, because Germany is not going all-in this week which is pretty much guaranteed. So, even if the 50% haircut happens on Greek debt, France will be on the hook with soveign ratings on their way down (and this is where the ALGO DRIVEN ALGO RAMP EUR/USD rally will meet reality, this week!).
This is when the proverbial shit will hit the fan. Now, the world will be begging for mercy, the banks will be bleeding (look at that rally in BAC today--not), or should i say getting flogged, and this is when LSAP will come in for more reasons than one.
First, we can't have contagion (the way they see it). Second, we cannot have the dollar melt-up 20% (thinking like a phd central banker). But more imporantly, Geithner will use Treasury funds to fund the IMF. Where in the world will all the U.S. funding needs come from as ongoing debt issuance is enormous, plus another 200 billion for IMF, plus the recnet Treasury dump? Righty-O.
Well, of course, this is when Uncle Benny comes in---to of course "save the world" and get on the cover of Time Magazine yet again.
Long story short, when everything is getting mauled--queing Tppers best voice--sometime within the next month, and right when you think you'd rather throw-up than buy anything at all, well, this is when you are simply gonna wanna back up the truck. That's where any real, relative money will be made: and you ZH's know where to go for that (as must have already).
And there you go. Feedback y'all appreciated?
Things will likely play out as you say. The upcoming Fed meeting & G-20 in Cannes 11-3 can keep the rumor/levitation cycle going beyond next week though. Not sure if ratings downgrades will be a factor since they repeatedly don't have an effect.
Better data as a result of seasonal trends (holiday employment additions, inventory build, & PMI improvement) may create a huge headfake here and suck longs in & squeeze shorts another 25-45 points on S&P easily.
Agreed that the market is making a major mistake thinking that the Fed is going to implement a mortgage purchase program at either of the next two Fed meetings without a big catalyst. The beige book was mild the other day and does not give them room to ease - particularly when one looks at the persistance of inflation it describes. The WSJ Hilsenrath story causing a buy frenzy was the author regurgitating the Fed's Tarullo remarks. Many consider the author to be Bernanke's mouthpiece but in this case he was simply drawing on Tarullo's comments to throw WSJ advertisers a bone. Disappointment will follow the next Fed meeting. Other Fed member comments show a continued split in sentiment on the need to ease further.
The funny thing about this global equity run is it prevents intelligent reform from being implemented given the gravity of the situation (if you take minor G-20 finance ministers at their word).
In all seriousness, if any was left, one might want to have a look as to which groups of traders are involved in these pairs, and ask themselves, why the change?
At first blush it looks like the inverse, there are more eur longs than there are shorts ( yes COT says eur short int up), and more usd shorts than longs.
What sayeth the robotard, on this conundrum?
QE4, bitchez
...now Robotrader, tyou are being naughty. Two weeks ago you were a bear after the PPT failed at 1195. I told you there was one more big rally. You cannot have your commentary caske and eat it
...and btw, Wall St is already short on this rally. Longs are in for a reaming to 1150
Lol at everyone crying because they were short waiting on 2008 when GDP was -9 and a major bubble collapsed... The only major bubble to collapse now is in physical because ES is forming a major reverse H&S pattern and everyone will move out of gold and into equities because there is NO RECESSION. keep crying about "but debt is too high", no one cares and gold will soon tumble starting an avalanche with no hedge funds to buy futures because every other hedge fund is because of new position limits... Bahahahhahhahahaa
I dont see anything resembling a reverse H&S pattern. Chart?
SP500 weekly chart shows megaphone wedge and looks bullish.
Market consensus became clearer on Friday so back to the original bullish analysis and SP500 weekly chart reverts to bullish/neutral.
More info:
http://stockmarket618.wordpress.com