NYSE Short Interest Soars To Highest Since July 2009; Is An Epic Squeeze Forming In Bank Of America Shares?

Tyler Durden's picture

While two weeks ago the notable feature in the NYSE short interest update was that it had grown by a whopping 1 billion shares, or the most in over two years, this week's highlighted feature is that in the second half of August evil "speculators" did not relent in their negative bias, and brought the total NYSE Group short interest to a two year high or 14.9 billion shares, a 484 million share increase from the prior week, and the highest since July 2009 when the market still was unaware that central planning was the name of the game, and being short actually meant taking on the Chief Printing Officer head on (and fewer still realized that being long gold was the only effective way to "fight the Fed"). And just like last week when we speculated that we can "expect some even more furious short covering sprees to send the S&P much higher on an intraday basis" courtesy of this massive short interest overhang (which will without doubt be used by stock custodians to create a rally if and when needed, just like back in March of 2009, by making recalling shorts in every name), the probability of a massive "face off" rally grows as more and more join the ranks of those believing that the US capital market still plays by the rules. Newsflash: it does not. And anyone trading stocks, on either the long or short side, is guaranteed to lose.

And as an added bonus, we have added the short interest in Bank Of America. Doomed company and stock? Absolutely. But is it overdue for another massive ripfest before it's lights out. Guaranteed!

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GeneMarchbanks's picture

Dear Hedge Funds: Please short BofA until zero.

For the first ever I hope that Tyler is wrong here on BofA. Drop'em Now not later or next time NOW!

Let's get this over with...

SheepDog-One's picture

Everyone tells me 'there will be another rally before a fall'...well hell how many times? Doesnt the last rally to DUH 12,800 count as 'the rally before the fall'? 

The problem is all these nutsacks keep piling in short with whose money I have no idea, setting up to get creamed by short squeezes. I wish I could reach these fund managers and squeeze their necks until their eyeballs shoot out!

bankrupt JPM buy silver's picture

" And anyone trading stocks, on either the long or short side, is guaranteed to lose."


Stack the metal.  Put it away for THE rainy day.  Enough of these games already.

DeeDeeTwo's picture

Wriitng a blog = "I can't make money trading". Buying gold = "I can't make money trading". Krasting is Exhibit A. The dude made the big bucks trading on Inside Information with banks, Milken, etc... you know, the people RESPONSIBLE for the mess we have. Now his connections are so crappy... that he is grinding a blog worth low 5 figures.

IQ 145's picture

Bruce has gone down in my personal hall of fame; the day the Swiss Franc popped up over 1.40; vertically, at the top of an exponential rise, which we knew was caused by the European Public panicing into the Swissie as a "safe haven; Bruce concluded; "i'm holding on to my Swissies"; I immediately posted Sell, Sell, Sell. Short the CHF/USD. A completely obvious trade that could pay off in 5 figures in ten days. Yesterday, he published a piece that concluded; " I don't know anything about foreign currencies"; I didn't bother agreeing with him; I just laughed and went on to the next thing. Of course, you're right.

Abitdodgie's picture

Hay sheepdog i am feeling hostilaty in your comment 

max2205's picture

Everyone I know is flat via hedges. Short hedges. This could be a non indicator

ZippyDooDah's picture

You REALLY want to bet against Tyler's record?  Really?

max2205's picture

Where'd our old Tyler go ??

disabledvet's picture

"Guaranteed! Guaranteed " yeah i'll give you a guarantee--short this and you're dead.

IQ 145's picture

The article asks is an unbalanced short interest position in BAC going to result in a rally. the answer is yes. The stock price will trade higher from here for a couple of months probably. Too Big To Fail means exactly what it says. I posted on this blog the exact day to short the DJIA at 12,700; you don't short bottoms or rallies off of bottoms; you short highs that are failing. Unless, of course, you're a civilian and intent on providing chum for people who know what they're doing.

LongSoupLine's picture

one order of engineered corruption, coming right up.

disabledvet's picture

That's "Guaranteed corruption" to you.

Traianus Augustus's picture

"anyone trading stocks, on either the long or short side, is guaranteed to lose."


Put this on the tombstone of all capital markets not just stocks!


zorba THE GREEK's picture

It looks like many investors are betting Greek default is not priced in.

Traianus Augustus's picture

Greece 5yr CDS close price today only 7,234.00 up 52.87% from yesterday!!!  US Equity market rally on ?????

Cdad's picture

It looks like many investors are betting Greek default is not priced in.

Correct.  And that short interest chart looks quite bearish for the S&P...so I am a tad confused right now with the hyperbole about it indicating a massive short squeeze is about to happen.

Just when folks think that all shorts would have squeezed out last month...nope.  They are pressing.  

So...someone let me know what I am missing here.

***And furthermore...what is this business about "priced in" about anyway?  Seriously, what equity out there, especially after that last 24 hours is priced to anything?  Nothing is priced in to this market because fundamentals do not matter, and even the supply and demand of shares do not matter, as does thinking, or honestly assessing Europe or ANYTHING.

This market has been broken for three years.  Price means nothing more than the algo that is buying or selling a particular on any given day...or even any given hour.

So you tell me...how could we price in this situation in Europe...or in a rear view way...how could it be priced in?

Cdad opens the floor to ZH members, including criminal syndicate Wall Street HFT guys, to answer the question of  "priced in" ***

SheepDog-One's picture

I hope thats the case Cdad, this time too much pressure to perform a short squeeze again.

'Is total economic collapse priced in'...when the ICBM's fall on NYC some morning soon the DOW will probably rise +200. 

Stax Edwards's picture

With the exception of 2008 look at what happened to SPY once everybody and their dog thought shorting equities was the sure bet. The fact is the Euro problem is appropriately reflected in the European indicies.  The exposure here and the reaction to each days events in US markets is often overdone, particularly in equities with minimal exposure to the Euro.  I think algos have a lot to do with that with the record correlations.  The postitive for our markets is the problem is over there, and you would have to be very naive to think money managers on this side of the pond aren't hedged against that.  I mean for gods sakes it is playing out in slow motion, plenty of time to get hedged appropriately to your exposure.  When and if Greece gets the boot (I hope soon), mayhem shall ensue for a bit and I for one will be picking up bargains.  Doesn't mean I am right, but the reach for safety is awfully crowded.  This from a guy who went ultra cashy in May/June in anticipation of a huge crash.  I watch dollar strength like a hawk though.

You know what they say, whenever everyone moves to one side of the boat....

Cdad's picture

With the exception of 2008 look at what happened to SPY 

Exactly.  Look at the vey front end of that chart again.  Based on this chart...we are there once again...in the present.  Now, follow the chart out to 2009.  That is when everyone hit the same side of the boat.  I think that is the direction we are going.  I believe shorts will start getting very aggressive here.  Why wouldn't they?  The have a guaranteed sovereign default directly ahead.   The SPY did not reverse and head higher until this short interest was much higher...and steady month to month.  Look where the SPY is in relation to that rising short interest.  In a relative sense, it looks too high to me.  Again...this if we are trying to interpret these two statistics juxtaposed.  

As for the safety trade...I hardly think of being short as safety.  Currently, long gold and T bills are the crowded safety trades, wouldn't you agree?

As for the rising short interest and the pending Greek default...that default could happen in a couple months...or tomorrow morning.  Right now you have a growing list of folks throwing in the towel on the whole issue.  You have Greece preparing for the return of its currency.  And the US equity market is rising...on nothing...lies...repeated rumors of solutions...banker statements...and on light algo volume.

So I guess my point is...you can run for the hills on your short positions if you like, but again...why exactly would you be doing that?  What on this chart would indicate that you should cover?  

Let me know...'cause I don't see it.  I admit, this is one ZH post that I simply do not understand in the slightest.  And if your answer is Operation Twist on the 21st...that is the ONE SINGLE THING that clearly looks "priced in" based on action in the 30 year bond...something that should become even more clear after the auction tomorrow.

DeadFred's picture

The lies have been thick on both sides. Greece is going to default over the weekend, Moody's is going to downgrade France. Everyone jumps in short and then it doesn't happen. Good time for a short squeeze and it will continue that way until Greece does default and France does get downgraded and so on. Why are these guys getting squeezed? Because they're levered to the hilt stupidly once again. The effects of the Greece default are not priced in, how could they be? We have only the vaguest clues of what will happen when the stuff hits the fan, will liquidity freeze up and if so how much? Everything I've read on the freeze assumes it will be like 2008. Why? We may have learned enough to avert disaster or we could be fooled because 2008 was only the Coors lite of liquidity freezes and this will be the Jack Daniels version. I'm betting it will be a good stout port at least. Sovereign defaults, state defaults, bankruptcies, crashing tax receipts, it's a huge list of things that MAY happen. We don't know how this will unfold so it can't be priced in, period.

Belarus's picture

Yup, going long or short is dangerous. The market never tanks when everyone is expecting it. We'll have to endure more pain to the upside before that happens.

So just Google "save." Anytime there is a new article....go very long, until you don't.

jdelano's picture

I've had a lot of success in this yo-yo market holding near the money puts--the trick is just to keep your balls and double down if you take a 25% hit. Eventually your gonna get a big down day and when that happens they FLY. Every time I make 20% I cash out and wait for a solid up day to put em back on. Been a minting machine so far--playing with all house money. Now to make the really big bucks I think I'll make a DVD and an infomercial.

Manthong's picture

Yeah, same experience.. it's scaring the crap out of me but it has been working.. just gotta' be careful not to go overboard.

 Oh, and to whoever junked you.. I have five figures in the last 30 days that shows it works.

DeadFred's picture

Maybe then you can post on the top bar of Zerohedge. Oops, did I say that out loud?

Manthong's picture

P450 -480 puts PCLN, in and out again and again.. P140 to 170-AMZN, CMG P250-270, P315 AAPL.. C180-230 GLD over and over.

There you have it..  It seems you just have to be able to tolerate daily four figure swings, double up if you go down far enough and be a little prescient or lucky with timing, trend and circumstance.

I'm not qualified to teach anybody anything. I just know what seems to work for me and I'm willing to put digital fiat on the table and take it off.

Nothing there that rates top line on this blog.

I just hang here to see if everything is fixed yet and the macro has changed.

SwingForce's picture

Remember back in 2009 when BAC issued billions of new shares? They allocated in million-share lots to (guess who?) The Shorts. 

SheepDog-One's picture

WHY do these idiots keep piling in short?? WTF are they more gulliable than Charlie Brown on a Lucy-held football? 


And you moron shorts are the ONLY reason the FED is still in business WTF KNOCK IT OFF you damn nutsacks!


mynhair's picture

My sentiments exactly, SD1!  Who are these moron shorts that can't stand the heat, but insist on cooking?

Guess Leverage is not just a TV show.  Bunch o'fools.

ZippyDooDah's picture

This fucking nutsack keeps looking to short this overhyped shitsack system because it would be just so delicious to make money off the "inevitable" failure of said system.  Just desserts, and all that.  So yeah, call me a sucka, sucka.

trendtrader377's picture

You'll have to forgive my ignorance but can you explain how the shorts are keeping the FED in business?

SheepDog-One's picture

FREE fue for them to short squeeze and ramp markets on it!

Variance Doc's picture

Hey SD1, I'm short.  You want to call me an idiot?  Just try.


There are many factors at play here and blindly going short is not a play; use some non-traditional mathematics/statistics and there is money to be made, but be careful.


To blanket people with the concept of stupidity for shorting indices/stocks is like living in a glass house.  Careful motherfucker.




kito's picture

tyler, sorry to digress, but is krugman really saying he is bullish on gold? due to deflationary pressures?



malikai's picture

My usual response has been that I have no idea what drives the price of gold, to say that it’s a market driven by hoarding in Asia, Glenn Beck followers, whatever.


ReactionToClosedMinds's picture

Paulie the K forgot to reference Donald Rumsfeld's 'office' copy subscription cancellation of the NYTimes in response to Krugman's 'gracious' Sept. 11 memorial blog  along with GBeck followers.


When is Krugman going to start going after Ron Paul .. who has more principle than Krugman can imagine?

Tyler Durden's picture

Yes. Our collective head exploded as well.

GenX Investor's picture

TD - how would Short Squeeze play into Quad Witch this Friday if Euroland implodes a the same time?

Tyler Durden's picture

Buy cheap straddles on everything that is not nailed down.

ReactionToClosedMinds's picture

a very long time ago .... a solid mutual fund builder named Bill Berger kept getting told by one his brokers (at Mother Merrill no less) that then Major Market Indices (through 80s MMI was big index vehicle at the time ... rumors had it that the 'first' Plunge Protection Team ..... coordinated by one Rbt Rubin et al, in October 1987 on an approaching lunchtime lull on Tuesday after big crash ... jammed buys of MMI to torch the shorts to reverse the dynamic) puts were cheap while market risk was rising starting early 1987.

Berger followed his advice finally and bought cheap puts as a more direct form of then Wall Street genius touted Portfolio Insurance. For like 10 years after 1987, Berger funds had an outsized performance mismatch against almost all peers purely because of that move.

SwingForce's picture



MMI or XMI Amex Index, futures traded on CBOT had Big MO in it...DOW wouldn't license precious "name" for index options, so XMI did with 20 stocks...but the real story is that CBOT was independent of CBOE and stayed open. Good for you RTC your memory serves you well. Not sure VIX was invented yet LOL.

ReactionToClosedMinds's picture

now that is a classic (The Missiles of October from "April Fools")

so many had to pack boxes so suddenly out of Drexel

 who can ever forget .... "Lock & Load" circa that era ...  at least  back then people wore being an 'asshole' on their sleeve and said f'**k you ...stop me


IQ 145's picture

No reason for the head to explode it's a rational and understandable article. Zero interest rates are undoubtedly a very important driver for the PM's. I would say PM's reflect un-certainty and fear. There are whole classes of investments; representing a lot of money for a lot of people who have money, that "may" come un-stuck; or seriously un-glued. If you get tired of worrying about it and you're in a zero-rate environment; metals look pretty good.(No Counterparty). It's well established that Gold does very well in deflationary crashes, for instance; the key word here being "crash". There's nothing surprising about the general opinion as to the meaning of gold prices, ( an inflation indicator), being wrong; Virtually everything everyone believes on this blog is wrong. The vast majority of these people believe the price of the metals is "controlled" or "manipulated"; which is just infantile nonsense.

Motley Fool's picture

after a quick read.

No he is saying gold is in a bubble, in different words.


krugman = idiot.

SheepDog-One's picture

I dont know, Im starting to wonder what the 'value' of gold really is if no one is going to use it to back a currency....$1900? $200? Its a chunk of metal, yes....what else is it REALLY?

Well, anyway its obvious to me PM's will have to be held for many years at this point. No one wants a gold backed currency, so we'll first have to see Mad Max doomsday worldwide, then rebuild into something, then maybe back currency with gold. Until then, it seems to be a paperweight.

Motley Fool's picture

It is pretty much useless otherwise. and that is exactly why it is valuable. ;)


keep in mind. there is a legitimate need to store value through time.


If you hoard anything with use you are effectively screwing someone out of something usefull (marginal user).


Gold's uselessness, other than store of value, serves that very real need. stock-to-flow. :)

SheepDog-One's picture

Right, my point being it seems like a long time before its 'put to use', until then may as well just put it in the safe and ignore it for a year or so.

I see these guys with their minute to minute entire websites and blogs devoted to the latest news on gold and real time quotes...what does it matter? We've got a world of things that have to happen first before gold is the world currency backer. And may never be even at that.

Motley Fool's picture

You are quite correct, realtime worries about the pricemoves of gold are irrelevant.


Also, be carefull with the concept of gold backing a currency. A gold standard is a terrible idea.

On the other topic, time, it wont take that long. The dollar system has reached a point of no return mathematically. Once it collapses gold will come into play again.