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Goldman Confirms Smart Money Is Now Offloading To Retail; Sees 1.2880 As A EURUSD Short Covering Threshold
Earlier today we got our first clue that the smart money has stopped "distribution" and is now offloading to retail after we saw the first equity fund inflow, however tiny, in months, and only the second one out of 37 outflows since April, as reported by ICI. The second and far more important one comes from today's Goldman sales roundup, which confirmed that following today's latest borderline ridiculous meltup, retail investors looking for the sucker at the poker table, wouldn't be able to find one. Here's why. Quote Goldman: "As has been the recent trend, our cash flow remains better to sell, both from long-only and hedge funds." And there you have it: smart money (well, relatively so) has "recently" been using every melt up chance it gets to dump the bags with the E*Trade baby. Third and final proof: "ETF flow however skewed toward better buying." At this point retail investors may want to ask themselves: what do they know that the others, who are actively selling to them, don't.
And in other important news, from the same roundup, most definitely not written by Goldman's Tom Stolper, which is now just 140 pips from our latest contrarian target as of 2 weeks ago, we find that the magic line for what could be a vicious thrust higher in the EURUSD pair is 1.2880. Above that, the long-overdue short covering may finally commence: "The EURUSD rally extends another day. First on hopes that the IMF might be bulking up bailout funds, and then on the back of a solid rally in US stocks. Stop-loss buying the whole way up, and for the first time in recent memory, folks looking at short-dated topside calls should the move extend further. Almost all flows from hedge funds. The pair closes just below the 1.2880 pivot. Above there and there’s a chance that all those shorts represented on the IMM report – that is, technical accounts – might start to cover." Summary - hedgies selling stocks and doing all they can to trigger a short-covering rally in the Euro. Oddly, it sound somewhat agreeable.
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It stands to reason that the pump of the last week or so was designed to pull in the last of the retail suckers, those who have been waiting around for an entry point only to suddenly panic, believing they've missed the boat.
Shooting fish in a barrel is so much fun. (Sorry. Forgot the /sarc tag.)
Can we come back and quote you on this analysis at the end of the month when the averages are higher than they are now?
I gave no time limit. All I said was that the pump of the last week or so was designed to pull in the last suckers. It will end when there are not enough suckers left to sustain the rise in the face of terrible 4th quarter earnings and a worsening European 'situation'.
In fact I expect the pump to push the S&P 500 to 1340/1355 before it runs out of steam. That could easily last until the end of the month and even into Feb.
You're so clever. You're only wrong when you think that you're wrong, but right.
1337.50 ESH12 on 02/24/2012 ... Line up and sell to the gills ... also VXH12, another sure thing at 20.25
I love learning for free! It's much better than the education the market gives me. You expect two or three weeks to eke out 32-47 points. That seems like the pre-downgrade type of volatility, not the whipsaw action we've grown to love (Sarc). Still if you look at the charts the volatility has calmed a bit since the Fed opened the swap lines. Why does it turn before the 1364 top? Why not now when the S&P seems to be at a peak-to-peak resistance and the EURUSD is at the top of it's nasty downdraft trading channel it's been in for soooo long. If the euro rises a few dozen pips it's out of the channel and the short covering should start. If the squeeze starts why would it stop at 1.30??? what is there at that point to inhibit such a massive short position from squeezing yet higher. The 38% fib level is way up at 1.32. That's where I put the first target in my inexperienced mind. When wiser minds put it elsewhere it makes me ask "what did I miss?". Then there's the question of why do people sell stocks to start a currency short squeeze? Ammo? This is Fight Club so I will continue working for knowledge on my own but clarifying info is always listened to.
No time limit? You mean you can be right 10 years down the road? I can also say S&P will go to 2000, no time limit.
Me and my friends are just "Waiting on the World to Change"...
http://www.youtube.com/watch?v=oBIxScJ5rlY
Let me see if I have this correct. The shares now being distributed/sold are the same shares that individual investors have been selling to the pros for 9 months. So which is the "Smart" money?
How high can the market go on $10 Trillion LTRO?
Dumping at every opportunity to get ready for the post election crash. My humble guess of course.
Wow. First off if the euro short covers the dollar sells off big and the bears lose not only the two testicles already gone but that undescended one gets ripped off too. Secondly if Goldman predicts that then now is the time to go short the euro big time no?
Anyone care to guess on technology earnings tomorrow? Oracle got thrashed on Europe. Does it continue or does the market rip higher on great earnings?
Isn't there a contradiction in Goldman's statement? I agree with your first point that US equities should take off with EUR/USD short covering rally so why is Goldman selling stocks to retailers before the EUR rally?
If xnlx and ffiv ah earnings today are any indication, technology earnings tomorrow should be astounding!
yeah didnt get that either
I've seen no relationship between market action and market fundamentals for many years. I would say the market rips higher on horrible earnings.
But the E*Trade baby seems greatly successful. Do you mean to tell me that what I see on television is all just a big lie designed to get me to buy shit?
Yep!
http://www.youtube.com/watch?v=AYrpROr9Gmk
What's "the smart money"? I've seen a lot of "smart money" get stupid pretty quick...
LTCM
Amaranth
Goldman Alpha
Drake
Turnberry
Atticus Funds
MFGlobal
etc etc etc
Hence the word relatively.
Here is a good sniff test: if the FBI doesn't have your phone bugged for making "profits" on Phase II/III/NDA announcements in the 2004-2008 period, or if your names are not Stevie and Cohen, you are probably not part of the club.
If I worked in the FBI I'd be front runnin' trades like crazy. They need to be more enterprising: FBI Asset Management. I bet they could get some seed capital with no problem.
All those trades are done thru Godmother Pelosi.
Any time you need some money, it's right here waiting for you. But I can't give it all to you, you know, for safekeeping.
But if you are part of the government, it is just hunky dory to use any inside info available to you and your staff.
Surprised that we have not yet heard of a Congressional Expert Network.....you know, one in which different staff members trade info....and then re-sell it to WS....this has to be going on....maybe some of the boyz at the SEC ar involved in it when not watching midget, Mexican, tranny porn???
I've never heard of anyone who actually participated in any major market attempting to fade "hedge funds"; which as we all know, are wrong at least 50% of the time. The way to sum up the present situation is an old saying; "the Longs have the money made"; and that's about it. The would-be shorts are still whinning and making up conspiracy stories. When it's not a bull market anymore, it won't be. right now, it is. All t he news that's fit to print.
1 more in the smart money -Timothy Geithner department ESF as posted on ZH.Organized crime without involving government(unlimited money supply) there is not enough fire power to crack "things" countries around globe.
OT-I love the E trade baby references.
E-traders: buy high sell low
smart ass: buy high, sell higher
Bernanke: buy everything, never sell, he prints money
Ever since the LTRO the trade has been short Euro, long equities. Who knows where it ends.
Parity.
Won't an additional 10 Trillion Euro LTRO add at least 2 or 3 weeks to the rally?
If Europe prints does that strengthen the euro as proof of their resolve to stay united or weaken the euro because it dilutes their currency?
They're already printing.
At least gold is staying relatively cheap. Time to buy a little more I think.
Hahahah good one.
Euro? No. Eurozone, probably. Depends on those Germans...
Actually rumor has it they are having a problem printing since the ink manufacturers cut off their credit due to past due balances....
I believe that is the definition of a paradox. Similar to military inteligence, honest goverment, or free pussy.
What most people forget is that the original purpose of the Euro was to depreciate (inflate) the currencies of Germany (D Mark) and France (Franc) to make their export centric economies more competitive. They welcomed the PIIGS into the Euro for this sole purpose. The problem was that the US had a stronger weapon up their sleeves. China and the USD-RMB peg. Well played sir, very well played.
So to answer your question, the Euro nations intend to keep the EURO low. It's only a matter of whether they can keep it from over inflating.
Yes, marked up distribution trades or bulltrap to dumb money - crap volume is a telling sign. Anyone getting sucked into a possible momo trade...is going to get it in the neck.
July/Aug 2011 peaks indicate overbought signals.
Short cover on the EUR via more and more BS from Europe? Nah, Hedge funds will buy USDs force the EUR down. Create a rally with the USD and everyone from Iran/Greece/PIIGS to China will buy up USDs. Equities sell, USD bid.
Will be sharp and brutal.
Europe has been written off
I could not agree more with this. Once Greece is squared away the rest of the PIIGS will want a similar deal.
yes but by then the effing euro could be @ $1.45 again
If so gold will be at 2200. I will take that.
Me too. 2200 will be super nice.
I don't know how much lower the EURO will be ALLOWED to go. It is to the benefit of the US and China to have a strong EURO. I am surprised the FED has let it go below 1.30. Either way a lot of sellers and some string short covering could be painful for retailers. If they are waiting for an entry point, then it is probably too lat. The money has been made.
So who has the resources to buy enough USD's to even make a dent? I'm really struggling with that argument.
The ECB, through the Fed swapping with the ECB to buy back USDs to sell to the Fed, so the Fed doesn't have to print USDs to give to the ECB to swap with the Fed.
Simple.
boom! you just nailed it in two lines. outstanding.
then the ECB backdoors the bond markets in Europe. keeping credit spreads at bay. how long can this charade keep going? till the CDS market goes bidless on the coming Greek default and the PIIGS one by one wanting out.
I feel like I just learned something. I love this site.
It's like a network printer, the ECB and the Fed can both print down the hall! Just don't tell the chinks, they'll bitch about the cost of printing.....
Yup!
"Take off is optional, Landing is a must"
GS is fucking money! they lose 58% in Q4 and the stock rallies 7%.. total Bullshit
from wires:
0148 GMT [Dow Jones] Following reports of a potential expansion of the IMF's lending capacity "the most important thing to note is that this is not a done deal by any stretch, and should be seen simply as a statement of intent by the agency," Brown Brothers Harriman says in a note. The house thinks markets are getting too bulled up on the news; "As the saying goes, 'Show me the money!' Until then, we remain skeptical that the IMF will be able to obtain the extra funding it desires." Even if the IMF does get extra financing BBH questions whether it will make a material difference as "IMF/EU programs for Greece, Ireland, and Portugal have not been able to halt the crisis." It notes the fact that the IMF sees a need to increase its lending capacity due to greater potential financing needs implies "things are going to get worse before they get better," and suggests the agency sees a probable borrowing program for either Spain, Italy, or both.
Brown Brothers playing the scripted role of pretend skeptic: "Oh it's not a done deal! We might not print money and bail sick Euro sovereigns because...we might decide we don't feel like it...or we might get a headache or have a prior engagement. No. When the IMF requests $ 1 Trillion it simply means.....they need a new expresso maker"
lol
The latest reports from Portugal spell very bad news for Spanish banks. The Portuguese program was supposed to prevent that and make severe markdowns of Spanish loan books unnecessary for a longer period. In Italy compliance with new programs is far from being a fact. And there sit the banks of France, on the other side of both problems and not recapitalized.
This is exactly why I think the Feb LTRO could be a biggie - the ECB has to get much more cash out to the banks pronto, because more bad news is already inbound.
Hmm, maybe initial inflows to mutual funds are just companies matching 401k contributions after the first of year? Many wait until EOY...
This whole mutual fund thing is irritating. People are either buying ETF's or buying individual stocks. I know mutual funds have big recent outflows. But I would love to see some data on etf and individual stock inflow/outflows. Until then I will just assert as my opinion that is where the money is going and I have no solid data to back up my point.
HFT cannot exist without volatility. Investor's nightmare is HFTs income, namely volatility.
Same thing with brokers. Only normal volatility makes them money since suckers keep coming in. But, extreme volatility absorbs many suckers and they leave. Suckers leave hence it increases volatility. Volatility gets worse more suckers get absorbed and leave. More people leave, hence more volatility. It's a vicious circle until nobody to dump into remains. Then.............pops.
If you're WINNING and not regarded "smart money" in the classical sense, then you're probably doing something illegal.
Like it or not, a close tommorw that is above the highs in October will see a high probability to reach the July highs without any huge outside influence. You didn't expect them to distribute all that garbage in 1 day did you?
Oh and btw my t/a skills are mediocre but I know a few guys that pretty much put all the claims it doesn't work to rest.
Tommorow is a very important day technically. On the flip side a lot of people considered today a breakout and bought in. Technical it's not and could be the start of a selloff.
Some will now say "oh so you don't know either way" and those are the ones that already can't remember what I said in the first paragraph.
Wait what.
No seriously my balls are tingling. When my balls tingle it's usually "LOOK OUT BELOW"
I'm short now, I wasn't until today. My balls never lie.
+1 for solid testicle analysis.
Know what you mean...its like getting a coating of Atomic Balm in your jock...well, maybe 'tingle' isn't quite the right term.
I hope you are right. I went short yesterday but didn't realize GS would rip my face off. Still holding the bag but I too am convinced the time is soon because I started to feel bullish on the market. When that happens I start fading into shorts.
Mine say the same
Am already (short) but i need those clowns to raise the markets higher so that i can be even more shorter...
Reproduction you can believe in
I ain't gay - but I'll lick them if the market goes way short tomorrow.
From the time I first saw those E Trade babies in a commercial I never had any doubt. They are literally the perception Wall Street has of its most favorite customers, i.e., the ones they can most easily bamboozle and run over in the markets like road kill, any time, any place they choose.
http://www.youtube.com/watch?v=AYrpROr9Gmk
http://www.youtube.com/watch?v=AYrpROr9Gmk
Oh and btw I assure you the gov't has professional chart readers working for them. They know when things are about to fly apart and react accordingly. Please refer to the recent huge bear flag that was in Forbes. Know, the Fed just couldn't let that one play out.
I agree. It seems this was orchestrated to get the Chartists to cry Uncle and go long. I'm sawing a lot of 50 wk MAs just above us. Funny because the daily charts look decent if you can ignore the fall clusterfuck trading style. I think they are trying to sucker people in with breakouts on daily charts.
Sorry I dont use spellcheck either. lmao.
"At this point retail investors may want to ask themselves: what do they know that the others, who are actively selling to them, don't." This thought has always haunted me when I trade. I know somebody somewhere is on the other side. And many times it damn sure wasn't the E-Trade baby.
Can we have a washout now please. I'm ready to see a re-rack of the table at SP 800.
All bad news here but the market continus going higher.
bears are suffering...
Right now:
Bad new is good. Good news is even better. Nothing matters until....................it all does.
So if the squid is saying:
Quote Goldman: "As has been the recent trend, our cash flow remains better to sell, both from long-only and hedge funds."
shouldn't we be buying?
So i bought some USD, CAD and AUD to diversify my EUR savings. Should i get my € back while i still have profits?
bulls make money bears make money pigs get slaughtered
dont be a pig and take your profits
You bought AUD? Are you out of you f#@king mind?
haha true. the guts of the s&p falls out the AUD is going back to parity.
Australia's main trading partners (Japan, Europe, China, US) are all collapsing. I would suggest more like AUD/USD of 0.6-0.7. It was only 10 yrs ago that AUD=0.5 USD and since then there's been a massive mining explosion and government stimulated housing boom assisted by Aussie banks that would embarrass even the US sub-prime lenders.
hedge funds will tear it apart. but till then, it still offers a nice interest yield. ASX200 is saying: Australia is stuffed via China meltdown.
Is Goldman unloading Timberwolf again!
EUR/USD hit 1.2879 at 10:30p est.
@ DannyTX: Can we have a washout now please. I'm ready to see a re-rack of the table at SP 800.
L0L!!! apparently not!
in the hotelNewHampshire, even the rallies and washouts are screwed down tight
When they run out of suckers, they will just force you in (haven't figured out how they'll do it yet). We're on the road to servitude. What's better than seductive or persuasive marketing? Compulsory consumption.
As in jail time and fines if we don't buy health insurance . . . like that?
Looks like gold will be hitting its major downtrend line at roughly the same time the markets and the Euro hit major resistance and the dollar hits support. Pullback or major reversal?
Me: Honey, we're broke and we can't afford that $200 coat.
My future ex-wife: STFU, it's 20% off, I just saved us $40!
Goldman Sack is nuts if they think the retail dynamic is what it used to be.
http://www.bloomberg.com/news/2012-01-19/dimon-blankfein-predict-markets...
you mean Rebound lower right?
I'm looking also for a short-covering rally in the euro but wouldn't buy big. COT data and retail positioning hints at euro rallies, while the inability to fall hard with a France/EFSF downgrade gives the impression that the bad news has hit a wall for now but going against the trend means small positions with a stop loss.
If the trend changed on a longer time frame, thats when you change your view but I don't see that.
The euro problems will continue to get worse so like a previous poster I think maybe late Feb will resume the downtrend.
The UK is looking at a negative gdp figure next week and Spain, France and Italy's austerity programs will speed up the euro recession. Where else is there to go? China is slowing, which will hit euro exports also.
This is really a race to the bottom now and more UK QE, probably ECB printing will happen this year. Gold may fall again with a good news rally or liquidity crisis but I see it over $2000 late this year.
If you look at the debt loads of U.S., Japan, Europe and the reliance of EU/Aus on China then it really is a case of propping up and see who blinks first.
Just saw 1.2901 and nothing happens
Crash in 2013? Post B of A bankruptcy?