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How The Most Hated Stocks Became The Most Loved In A Few Short Days

Tyler Durden's picture





 

Last week we pointed out the seemingly bizarro strategy that by now must have become mainstream mantra that buy-and-hold is dead but buy-the-dips-in-the-most-hated-stocks is a winning strategy. Since we pointed this out, our index of the 30 most shorted stocks has surged by 5% compared to a measly 2% (Fed-assisted) gain in the S&P itself. It appears the break with reality started on Tuesday morning (pre-empting the Fed high beta ramp?) and today's sell-off is seeing the index of the shortest-of-the-shorts give some gains back from an open over 6% to around 5% currently. For most managers, their year is done - a 300bps outperformance - for others, we suggest perhaps reducing size a little. It appears the man behind the curtain may just have removed some of the juice for more bizarro strategies (and maybe take those hard-earned gains and buy gold) as even with ZIRP extended, QE's nominal surge will likely remain absent until we see some market (otherwise known to Bernanke as the economy) disruption (and we suspect the names to suffer will not be the Utilities - that have outperformed handily post FOMC - and remember high beta up and higher beta down).

Chart: Bloomberg

 


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Thu, 01/26/2012 - 15:51 | Link to Comment DaveyJones
DaveyJones's picture

how come the headline doesn't apply to candidates?

Thu, 01/26/2012 - 16:07 | Link to Comment Buckaroo Banzai
Buckaroo Banzai's picture

OT, but a must-read: Ulsterman's latest "Wall Street Insider" interview: http://theulstermanreport.com/2012/01/24/wall-street-insider-california/

Thu, 01/26/2012 - 17:16 | Link to Comment fightthepower
fightthepower's picture

Wow, just WOW!

Thu, 01/26/2012 - 16:39 | Link to Comment AbruptlyKawaii
AbruptlyKawaii's picture

 

 

off topic and i couldnt care less except that the popcorn factor just got good

 

Houston?

"Judge Malihi talked to the attorneys in chambers before the hearing this morning and told them that he was going to enter a DEFAULT JUDGMENT against Obama and recommend that Obama’s name not be on the Georgia ballot"

http://cdrkerchner.wordpress.com/2012/01/26/obama-challenge-hearing-gave...

The Georgia SecState has already indicated that he will follow the judge’s recommendation.

Obama will not  get any popular vote or electors from the state of Georgia.   (??? ruh roh, really?)  

 


Thu, 01/26/2012 - 21:21 | Link to Comment chubbar
chubbar's picture

Think any MSM agency will mention this little development? Naw, just not newsworthy enough for them.

Fri, 01/27/2012 - 01:55 | Link to Comment AbruptlyKawaii
AbruptlyKawaii's picture

negative ghost rider the pattern is full

http://www.youtube.com/watch?v=30Q6S7WLeiA

 

HAHAHAHAHAHAAAAAHHAHAHAHAAHHAHAHA to eternity.......................

 

Thu, 01/26/2012 - 16:01 | Link to Comment carbonmutant
carbonmutant's picture

With the VIX at ~18 Risk is on...

Thu, 01/26/2012 - 16:13 | Link to Comment lolmao500
lolmao500's picture

Well ain't that a bitch?

Judge Has Ruled Secretary Of State Agress Obama Off Of Ballot In Georgia

http://giveusliberty1776.blogspot.com/2012/01/exclusive-breaking-newsjud...

I just got off the phone with Dean Haskins who was in the courtroom this morning assisting with the Art 2Pac live stream. Judge Malihi talked to the attorneys in chambers before the hearing this morning and told them that he was going to enter a DEFAULT JUDGMENT against Obama and recommend that Obama's name not be on the Georgia ballot! All of the attorneys expressed a desire to put an abbreviated streamlined case on the record and the judge agreed.

The Georgia SOS has already indicated that he will follow the judge's recommendation. That means that Obama will not get any popular vote or electors from the great state of Georgia! 

Thu, 01/26/2012 - 16:17 | Link to Comment HD
HD's picture

I doubt Obama was counting on much Georgia support to begin with.  Now if you're talking Ohio or Florida, now there he's got a problem...

Thu, 01/26/2012 - 16:19 | Link to Comment lolmao500
lolmao500's picture

Well this might just be the beginning.

Thu, 01/26/2012 - 16:26 | Link to Comment HD
HD's picture

Anything is possible...but don't be shocked if nothing changes. GOPs best chance is Ron Paul and they treat him like shit on their shoe.

Thu, 01/26/2012 - 16:33 | Link to Comment lolmao500
lolmao500's picture

Ya I know that. All this doesn't matter if Romney or Newt is elected.

Thu, 01/26/2012 - 16:44 | Link to Comment blunderdog
blunderdog's picture

I personally doubt the parties are going to allow a puny state government to interfere with the election process.  They didn't do it in Florida awhile back, either.

Prediction: this all gets totally "fixed-over" and Obama's name ends up on the ballot in GA.

Thu, 01/26/2012 - 16:47 | Link to Comment slewie the pi-rat
slewie the pi-rat's picture

prez0 has sent a note to judgeMalihi that he is terrified of dentists all his life~~ever since he was a little boy in kenya

is it just me or do others feel this could be bearish for elections in 2012?

we'll all prob stll be at summer camp in november, huh?

 

Thu, 01/26/2012 - 16:02 | Link to Comment GeneMarchbanks
GeneMarchbanks's picture

PPT

Thu, 01/26/2012 - 16:11 | Link to Comment alien-IQ
alien-IQ's picture

Does anybody really think "they" are going to let the market close Red today?

Is it even legal for the market to close in the red any more?

Thu, 01/26/2012 - 16:14 | Link to Comment CvlDobd
CvlDobd's picture

Nice little up trend line in WFC breaking down today.

Thu, 01/26/2012 - 16:26 | Link to Comment alien-IQ
alien-IQ's picture

I'm watching the /ES tapping the bottom of the channel on the uptrend (@1311.50)

It would be nice to see a close below 1308...and a break below 1300 tomorrow...but I'm not holding my breath. And I'm sure as hell not going to take a short position overnight. Just sitting on my hands today.

This month, so far, has been utterly ridiculous.

Thu, 01/26/2012 - 16:33 | Link to Comment CvlDobd
CvlDobd's picture

I hear ya brother.

I shorted some XLF this morning when stocks started looking a little weak. Hoping to cover at 13.

Thu, 01/26/2012 - 17:01 | Link to Comment alien-IQ
alien-IQ's picture

Amazing. It breached the channel for all of two minutes before bouncing right back up again.

Just another one of those days.

Thu, 01/26/2012 - 16:15 | Link to Comment The Axe
The Axe's picture

something stinks in the world of regional banks today

Thu, 01/26/2012 - 16:19 | Link to Comment CvlDobd
CvlDobd's picture

Fuckers won't break down from the wedge. Held that line barely today.

Thu, 01/26/2012 - 16:17 | Link to Comment steveo
steveo's picture

 

Letterman top 10 reasons why Japan tried to cover up the nuke disaster

http://nukepimp.blogspot.com/2012/01/letterman-top-ten-reasons-japan-hid...

 

Thu, 01/26/2012 - 16:55 | Link to Comment Scalaris
Scalaris's picture

Golden crosses and cheap money-pumping, a merry trading herd make.

Can't fight the hordes anymore. Dow to 25000 by mid February.

Thu, 01/26/2012 - 17:22 | Link to Comment Squid Vicious
Squid Vicious's picture

JCP up 20% on "visionary" CEO conference call... welcome to bizarro market!

Thu, 01/26/2012 - 18:50 | Link to Comment adr
adr's picture

Yeah, who would have thought basically admitting your products are overpriced by at least 40% and you will be sacrificing at least 40% profit across all categories would be bullish for the stock. WTF market completely. 

People never believe me when I tell them it doesn't cost $50 to make a shirt in Bangladesh. The average $50 retail button down shirt costs around $5 to buy from overseas vendors. It actually costs more for licensing fees to put a label on the shirt than what it costs to sew.

The question is how will Macy's and the other retailers respond. Remember when input costs forced up the price of clothing? Well it did but it just made a $4.50 shirt cost $5 to buy wholesale. JCP responded by hiking the price from $50 to $60 to make up for that $.50 in lost margin. How are they going to reconcile selling the $60 shirt for $30? How can they possible make Wall Street happy on a lousy $25 in profit per item instead of the $55 they used to make. Talk about margin compression.

The moral of the story is: nearly every consumer product is overpriced by at least three times. $500 for an iPhone is bullshit, $50 for a $5 shirt is bullshit, $8lb hamburger is bullshit.

Bullshit, bullshit, bullshit. Doesn't matter as long as the bullshit keeps sending bullshit stocks to bullshit levels.

Thu, 01/26/2012 - 18:18 | Link to Comment SAT 800
SAT 800's picture

To me this makes a certain amount of sense, and I'm glad to have a chance to read it.

Thu, 01/26/2012 - 19:24 | Link to Comment Georgesblog
Georgesblog's picture

Investment is now more about manipulating public perception than anything built in reality. Few things approach the lunacy of the Dot.com bubble, but the sovereign debt bubble will dwarf anything before it. This snare is so much more effective. Nothing servives without government intervention. That could mean that nothing survives, period.

http://georgesblogforum.wordpress.com/


Thu, 01/26/2012 - 20:25 | Link to Comment ekm
ekm's picture

BAC is about 40% higher from the $492 low in late december. This is the screaming example.

Fri, 01/27/2012 - 03:04 | Link to Comment rosebud
rosebud's picture

zynga is up about 2 dollars from two weeks ago. Is Morgan Stanley pushing this up so it isnt a money loser with Facebook ipo coming up?

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