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Long Overdue Short Covering In EUR Begins After 7 Consecutive Weeks Of Increasing Bearishness

Tyler Durden's picture




 

As predicted earlier today, following one of the most epic moves higher in the EURUSD in the span of 9 short days, driven without a shadow of doubt by the multi-year bearish sentiment toward the European currency, which in turn courtesy of the massive leverage inherent in the FX market, has been used as the catalyst to drive the latest risk on rally across all asset classes, the net bearish exposure in the EUR has finally relented, and after 7 straight weeks of increases in bearishness, hitting a whopping -82,697 net non-commercial contracts in the week ended October 4, the subsequent week finally saw a significant unwind in shorts, up to -73,795. And since there are 3 trading days between the end of the compilation period and Friday EOD, we are confident that by now the actual net bearish count is in the -60k's if not lower. Notable, however, is that while Euro short bets were unwound, bullish bets on the dollar continued to risk, hitting 46,886, a 7th consecutive weekly increase. While the margin covering of the EUR is already priced in, the other question is when the USD megabullishness will relent. For now, it hasn't which will likely be used by market makers to squeeze out highly correlated accounts into even more short covering across equities.

 

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Fri, 10/14/2011 - 16:07 | 1775050 Silver Bug
Silver Bug's picture

The house of mirrors continues, how much longer can this game go on for? They are all devaluing vs Gold in the medium to long term.

http://jimrickards.blogspot.com/

Fri, 10/14/2011 - 16:08 | 1775062 AngryGerman
AngryGerman's picture

nope, they have devalued against gold from the beginning

Fri, 10/14/2011 - 22:14 | 1776089 covert
covert's picture

keep shorting, eurobia will falter.

http://expose2.wordpress.com

 

Fri, 10/14/2011 - 16:07 | 1775058 mynhair
mynhair's picture

1260 is next.  It's gonna hurt.

Fri, 10/14/2011 - 16:17 | 1775087 d00daa
d00daa's picture

agreed, but there will be a bit of a pullback, too far too fast and need to sucker a few more shorts in for the last bounce up before everyone capitulates, everyone on cnbs is crying "bull market!" and they let it go at the end of the month.

i got smacked across the face on monday's gap up and have been repairing all week.  this rally is absolute madness.  but it is still a bear market rally.

Fri, 10/14/2011 - 16:21 | 1775106 Mike2756
Mike2756's picture

Tell me about it, grabbed some amzn puts on the headfake yesterday morning, lol. Missed it by that much!

Fri, 10/14/2011 - 20:37 | 1775870 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

There are only a few things driving these markets.  Oil production, gold production, and the supply of fiat are the three main ones. 

The peak in production of oil makes it so the dollar loses value, since oil only trades in dollars.  The lessoning supply of gold means Cnetral Banks are getting desperate for collateral for their loans, and the expanding money supply meansall prices of goods are increasing.

The Euro Crash is a head fake for the markets.  It is being done to make dumb money think that a fiat currencie can, by itself, drive the markets.  Markets rely on real information, such as supply and demand of real goods, not fake goods like fiat money.

How are everyone's long dollar calls going?

Heh heh heh...King dollar............

Fri, 10/14/2011 - 16:27 | 1775137 gringo28
gringo28's picture

yeah, i've been eyeing 1250 and then a pullback around expiration. was going to write some calls today but decided to wait until later next week. there's too much on sale still, especially materials, metals and energy. looking forward to some more China pornaganda over the weekend talking about how China is no longer interested in copper and ore and oil......yeah!

Fri, 10/14/2011 - 17:58 | 1775416 kengland
kengland's picture

G20 will fart over the weekend and the market will freaking light a fire on Mon. More talk of IMF..errr...Ami money flowing into Europa

Fri, 10/14/2011 - 16:09 | 1775065 FunkyMonkeyBoy
FunkyMonkeyBoy's picture

"latest risk on rally across all asset classes" -

Well, gold and silver have hardly budged really since their major wack-a-mole by the criminal human filth a JPM.

Fri, 10/14/2011 - 16:11 | 1775070 jdelano
jdelano's picture

fuck that.  they'll never get me out of my shorts.  (well unless they're female, and really hot, maybe.)  bulls win the day.  I'll win the war.

Fri, 10/14/2011 - 16:18 | 1775084 Nobody For President
Nobody For President's picture

I'm with you JD. (Especially the hot female part.) 

It hurts, but it IS gonna go down, and I am pretty sure a lot, a painful lot, and soon enough that I'll be able to ride out.

And we're gonna kill.

Fri, 10/14/2011 - 16:31 | 1775159 maxw3st
maxw3st's picture

Agreed. Just a way point en-route to a lower low. Haven't seen anything yet that changes my view that we will see 1.30 before long (no pun intended). I view this rally as a golden opportunity to reset shorts from the first ride down and make those same pips twice.

Fri, 10/14/2011 - 16:30 | 1775148 GenX Investor
GenX Investor's picture

Agreed.  You know your close to the end of the short squeeze when you look at a chart and want to vomit on your screen!

Fri, 10/14/2011 - 16:12 | 1775075 Dick Darlington
Dick Darlington's picture

And nice daily pimp job executed just before the equity market close. But no mongering of manipulation or evil evil speculators when it's to the upside. Lol, what a sad rigged game. If i was an equity manager I would quit immediately and start looking for a real job. Oh, bummer, there are no real jobs anymore! Well, i would quit anyway.

Fri, 10/14/2011 - 16:16 | 1775089 Nobody For President
Nobody For President's picture

"As predicted earlier today, following one of the most epic moves higher in the EURUSD in the span of 9 short days, driven without a shadow of doubt by the multi-year bearish sentiment toward the European currency, which in turn courtesy of the massive leverage inherent in the FX market, has been used as the catalyst to drive the latest risk on rally across all asset classes, the net bearish exposure in the EUR has finally relented, and after 7 straight weeks of increases in bearishness, hitting a whopping -82,697 net non-commercial contracts in the week ended October 4, the subsequent week finally saw a significant unwind in shorts, up to -73,795."

 

Jesus H Kee-Rist Tyler = would you please learn to use a period from time to time. Fuck. I got out of breath before I got to the end of this sentence/paragraph.

(And the next sentence wasn't much better...)

Why do you do this?

Fri, 10/14/2011 - 17:07 | 1775314 Schmuck Raker
Schmuck Raker's picture

Screening for "Mouth-Breathers"?

Fri, 10/14/2011 - 17:31 | 1775405 Biggvs
Biggvs's picture

Cocaine is a helluva drug.

Sat, 10/15/2011 - 01:04 | 1776371 IQ 145
IQ 145's picture

It's typical breathless internet wisdom; rushing to get all the tremendous significance out at once; but that's not the problem. This problem is that he doesn't know how to read the COT, the Commitment of Traders report that he, (imagines), he's reporting on. For everyone of these short positions there is a corresponding long. always. for everyone. The sum of the longs and shorts is called the open interesti; and of course, it goes up and down. None of this is of any use at all to a FX trader; aside from the facdt that it comes out last week. The rest of the post is just crazy dis-connected babbling about the "leverage in the FX market driving the asset markets"; just completely meaningless babbling. Sometimes he reports useful stuff; but his attempts to impersonate a market sophisticate are embarrassing. Tyler, you need to get somebody to explain the COT report to you; so you stop embarrassing yourself in public.

Sat, 10/15/2011 - 04:04 | 1776497 7bit
7bit's picture

"Sometimes he reports useful stuff; but his attempts to impersonate a market sophisticate are embarrassing."

100% agree.

Fri, 10/14/2011 - 16:17 | 1775091 Belarus
Belarus's picture

Yup, more short covering. I was right all along, every short in the world will be fucked silly by the despots. Once every one has covered, and I mean everyone, and the OWS protesters begin piling into stocks......

Well, that's when you'll have to be careful. For now, TPTB will not, under any circumstance, let U.S. stocks fall. It's in the national best interest they'll tell you...and that's why Ben is in their ramping with the full implied consenst of our U.S. government. 

Fri, 10/14/2011 - 16:23 | 1775110 jdelano
jdelano's picture

well then that can't happen.  cause I'm not covering.  Seriously.  I will go to zero.  Beyond that, they'll have to come to my house to collect cause I will take my pms and jump borders to a non-extradition country.  So there will be one stack of puts out there and a few thousand shares out short.  

Fri, 10/14/2011 - 17:30 | 1775095 ZeroPower
ZeroPower's picture

As disgusted as i am by the continuous runup in equities, lets not forget credit went much much tighter the past 2 days even before equities continued on to 1220s.

Have a quick look at CONTEXT and youll see the last push up in ES in consistent with that in credit tightening, TSY selling, and bearish USD crosses in FX.

Annoying, yes. But the market always looks for max pain, a reversal at 1200 simply wasn't in the cards this time.

Im thinking 1230s is the line in the sand, otherwise, new highs for the year we go. 

Fri, 10/14/2011 - 16:21 | 1775108 Belarus
Belarus's picture

We should just all listen to Buffett, and think long term. Oh....that means I'd have to be short. Sigh.

Fri, 10/14/2011 - 16:22 | 1775113 Bansters-in-my-...
Bansters-in-my- feces's picture

USDollar magabullishness...???

Say Huh....?

Fri, 10/14/2011 - 16:28 | 1775142 danger close
danger close's picture

Short covering rally, lmao. This bipolar website is as bad as the market; dangerous for your health. One day nothing but doom and then blame on short covering. Fear mongering would be more appropriate for you. Past two years market exploded and entire time nothing but crying here. This site pimped this bullsht Short covering rally last month only to see another low. Nice call! Sick fking clowns.

 

 

Fri, 10/14/2011 - 16:32 | 1775167 slaughterer
slaughterer's picture

Well, at least the shorts (I am being squeezed as well) have the USD bulls on their side.  

Fri, 10/14/2011 - 16:33 | 1775177 maxw3st
maxw3st's picture

I think the volume on S&P says it all. One 2week head-fake up then on to a lower low in EURUSD.

Fri, 10/14/2011 - 16:36 | 1775188 chump666
chump666's picture

theses rallies are really stretched now, there will be NO new highs.  rather a similar trading range that occured July/Aug before the market collpased.  we are due for a massive leg down.  i mean last session rallied on goggle and apple!  and everyone has gone long?  i don't think so.  panic buys, oct end profit taking + an 'event' = big fat correction.

Fri, 10/14/2011 - 17:58 | 1775486 whoisjohngalt11
whoisjohngalt11's picture

Well Administration had to pull the plug on a really expensive part of Health care coverage that is to expensive to even implement, called CLASS for longterm care of seniors.. Part of this new bill that no one even knows what it will cost...              http://heavenbounf.blogspot.com/ 

Fri, 10/14/2011 - 17:59 | 1775487 oldman
oldman's picture

I don´t anything about this stuff, but how do you reconcile a falling short interest in the Euro with a rising open interest in the dollar? The euro and the swissie are pegged for now and the ???? are buying the Aussie like mad----I dont understand how the dollar is going anywhere but down for now

What the fuck is going on---did these guys forget they are long the dollar?

It´s gets more difficult being an oldman every day with this stuff going on    om

Fri, 10/14/2011 - 18:13 | 1775522 eurusdog
eurusdog's picture

Covered half my EURUSD short a few weeks ago and I love this rally because I am going to hop right back on. Same with AUDUSD. 1.0400 back to .9300 After that, I don't know what is going to happen, the EU will have a bankrupt Greece, and atleast one member on the way out the door! What happens when a currency pair goes to 0.000? I'll have to look into that one!

Fri, 10/14/2011 - 18:27 | 1775558 Tic tock
Tic tock's picture

EUR squeeze confirming the currency is a fiction

Sat, 10/15/2011 - 09:07 | 1776710 Grand Supercycle
Grand Supercycle's picture

SP500 / DOW daily charts remain choppy but bullish.

A reminder that SP500 / DOW weekly indicators now give bullish warning. If confirmed, it suggests significant equity rally this year.

Importantly, monthly charts remain bearish.

http://stockmarket618.wordpress.com

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