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Plunge In NYSE Short Interest Explains Recent Market Rally
UPDATE: As an observation, QQQ Short-Interest is at 11 year lows (January 2001)
Curious what has provoked a vicious year end (and 2012 year beginning) Santa Rally, which until today had seen the S&P trade higher on 12 out of 15 consecutive days? Wonder no more: the reason is the same it has always been - year end short covering, which in turn has spilt over into the new year's momentum chasing HFT brigade and the occasional retail momo who still has some cash left after covering commission costs. According to the latest NYSE biweekly update, the short interest as of the end of 2011 was a modest 12.8 billion shares, a sharp drop from the 13.4 billion and 14.2 billion 2 and 4 weeks prior, and certainly a very far cry from the over 16 billion shares short which market the market bottom in late September. Also, for anyone wondering why so far 2012 is an identical replica of 2011, decoupling and all, look no further than the SI data as of early 2011 - SSDD. Short covered, and only as the year unwound did they dare to challenge the central banks and to increase their shorting activity.
As further evidence of what seems like a huge short-covering surge into year-end, QQQ (the NASDAQ ETF) saw short-interest drop over 43% into year-end to levels not seen since January 2001 (11 years!).
Chart: Bloomberg
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President Mutt, err, Mitt .?.
AND thats THE BEST We Got?
Yep, that sounds REAL Good...
Adding now to my Mutt futures shorts.
This is a bet that Willard Mittarand Benjamin Shalom Romney III won't stop the Fed from performing more QEasing.
Here's to hoping the Ron Paul black swan takes flight.
Mid day rally upon us - http://hedge.ly/z3ndB2
The dollar is getting its ass kicked. I wonder if the Fed needs to announce QE X or if they could just go on with it.
Wall Stret is nothing more than a Kasino!
-John
http://www.youtube.com/watch?v=gmqGGxrbHoM
Overweight Nasdaq
No short interest means there is nobody to buy (cover) when this fucker goes down.
Goes down ? - seems there is no amount of bad news that can make it go down.
It goes up on rumors and fudged stats, but won't drop on factual bad data.
Well they sure cleaned out their Gold and Silver shorts........
RONnie PAULino
Maybe Ronnie Paulino will go campaign for the Latino vote
Rhon Paulopolis was seen campaigning in Greektown
And short they will. All machine driven market activity aside. and IF you believe the VIX measures the price of downside protection, the Street is currently unprotected. Initiate Selling begets Selling program. And as brother Dog always says, "Let's light this [decoupled] crap candle!"
At least on that graph, the short interest dropped faster than any other period. Lot of room to move up, especially with the ridiculous bullishness.
Which means if any market slide gets going there will be no short covering to cushion the fall.
Hey Tyler, not to be off topic but it may be time to add 2012 to your copyright footer.
"Copyright ©2009, 2010, 2011 Zero Hedge, LLC. All Rights Reserved."
Just use this and be done with it:
Copyright ©4.54 × 109 ± 1% Zero Hedge, LLC. All Rights Reserved.
I bet the PWG shorts the market as much as anyone.
Is everybody in? Let the real fleecing begin in 3...2...1...
Yep...rapacious sellers today. I don't think they will let up. And on the buy side you have...cash poor mutual fund guys who know nothing but redemptions.
As I noted yesterday, MCD gave off a brief however very clear signal yesterday in the morning. This market cannot handle sell pressure, at all.
The S&P has no business being anywhere near 1300.
careful, I still don't know where the fleecing will occur. For example, the dollar has not been raped in a while (this explaining gold's move?)
The dollar will be the brunt of Bernanke's wrath soon enough, but it should hand onto DXY 81.5 until QE X. 81.5 is the longterm holding number.
I expect the Jérôme Kerviel moment to come within the next 2 weeks...
http://en.wikipedia.org/wiki/January_2008_Soci%C3%A9t%C3%A9_G%C3%A9n%C3%A9rale_trading_loss_incident
Whocoodanode?
US banks? Euro banks? FX? Do you have a pick?
I really don't have a pick... But I'll conjecture (out loud)...
1. First of all, one probably has to "buy into" the meme that the Soc Gen trader incident was the FIRST BIG THING which started the 2008 ball rolling (followed by bear Stearns in March & culminating with Lehman)... Remember that after Soc Gen, Bernank INSTANTLY had cover to whack interest rates...
2. Quite possibly, MF Global was already the Soc gen moment (in a different way)...
3. So the way I see it... there is desperate need for a BLAME in this moment... War with Iran isn't cutting it (at least not YET ~ because all the pieces don't seem to be in place)... In politics, it seems 'business as usual' (because the MSM seems to already have the sheep fleeced into an Obama vs. Romney showdown... Bernanke needs to get on with QE3 (because the 'synthetic QE3 of Euro SWAPS isn't really going to stay tethered that long...
4. So my guess is that what's needed is a good ol TRADING SCANDAL... A way to temporarily RESET markets in a way that they'll fall within some some kind of technically viable pattern across the board to buy time until the 2012 elections are completed...
5. IMO ~ the MOST RIPE (unexpected) thing to happen would be for the EURO TO RALLY... Therefore, the trading scandal would be something along the lines of a rogue trader caught SHORT the Euro...
6. As speculation might have it... Since BAC has rallied quite strongly off the 4 handle, there's where I'd look first...
7. 2008 was all about MONOPOLY... Bear Stearns, Countrywide, Lehman, Merrill, Wachovia, all went down... After the next round, there will even be less... It won't stop until there are only Goldman Sachs (which I expect to be taken private eventually), and JPM...
So that's my playbook...
Oddly enough... I can't say how Harry Wanger's "indices" will actually play out... Let's make it simple... Euro is tethered to Gold (so if the Euro rallies, so will gold & silver... I expect gold to make new highs, & silver, perhaps to rise, but not take out the $50 mark just yet)... Afterwards there will be another pullback (to 'shred' the gold & silver bugs yet again)... S&P will likely take a hit (as financials across the board will sell off)... This will get us to about May 2012, then I'll reconfigure...
My 2 oz... (Disclosure: I'm still stacking phyzz)...
+1 - "a rogue trader caught SHORT the Euro..." too much good propaganda in the last weeks, someone is bound to believe
Of course, they will sell everything before the panic then have their regulators cancel all trades after, as well as make sure their politicians do not pursue any legal action against them. Where have I heard this story before?
Dollar won't go down until additional easing takes places. Anyone think Jan 25, or March?
And the Fed is talking 'bout QE X. Selloff before gold hits $1700, QE X, War with Iran....
I bet gold sneaks up to $1700 next week, then the following week there is a selloff, it halts for a few days while everyone asks if we need QE X, Bernanke says, "Yup", and then boom.
That should be late February, and then days after Bernanke's helicopters start flying, Blackhawks engage Iran.
Well Cdad you were bearish last week (and so was I) and it didn't work out.
I'm again bearish (and short since yesterday), but I allow the possibility that this market will keep muddling through all the way to next QA.
There cannot be a QE here, with the S&P where it is...and especially with oil where it is. You can beg all you want for it, but the conditions do not exist for QE to be implemented.
Were it implemented now, the rise in the price of oil and gasoline would immediately absorb any effects of QE, and furthermore, the FED would be politically at risk.
http://www.youtube.com/watch?v=AVWB9SnQlP0
The market is more broken then Rocky's nose..
So going all in on LULU is likely going to be a bad thing?...
Not if you hedge it with BAC and NFLX....
Corollary: time to short. So let's see, looking at this chart... August was actual selling, October lows were shorts on fire, followed by epic covering, then Thanksgiving was actual selling, followed by Santa covering.
So now that there are no more shorts (only 12 billion!), are we predicting actual selling then? Or more shorting?
........shorting = selling
.....fund redemtions = selling
.......????? = buying
In a sensational interview President Barack Obama provided some deep insight into the monetary system: "The dollar is just an illusion" - the US currency was actually not worth anything.
All the facts:
http://www.webcompact.net/index.php/news/4468-obama-dollar-just-an-illusion-
You are pulling my leg. Obama doesn't understand monetary policy. And even if he did he wouldn't say all that. Where is the interview?
If that is true, there is no way in hell they will air that on 60 minutes.
"I don't want to end up like Kennedy. I really want to make a change. We need to change the system. Yes, we can!" ... This is the 'New Change' that we can believe in ... If Bush had said this they would have called him an idiot.
I cannot believe that Obama implied that the FED was behind Kennedy's assination, but he does have access to that little black book of Presidential Secrets I saw on 'National Treasure'
it is amazing how hedge funds get suckered again and again
maybe the smart money is covering because they were wrong...sanp to 1330 in the cards....
that reversal in BAC is quite interesting
Why. Italy banned all short selling on their banks. All the euro hedgies will have to short US banks instead -- and then get raped on the short cover. Let's not forget the debt ceiling is going to be raised and all those 'poor' US banks are going to have a huge shrinkage in their outstanding receivables courtesy of Unkie Sammy.
http://news.businessweek.com/article.asp?documentKey=1376-LXNM2G07SXKW01-7NFBQG8HJDHNDJ6BRPORRTBAKN
Plus you had the massive short attack on BAC on 8/3 at around $9.50 with the goal to pound it below 5(Options chains where banded at that level). $5 bounced and you'll probably see some nervous shorts trying to snipe at thinly traded levels.
Basically, it's a monkey shit fight between the Bernank and the short hedgers.
It's interesting to me; who bought it at $5.76 at two to one margin on a nice chart price formation; I find it it very interesting.
Time to take a gouge out of hedge funds. The programs follow them.
Just let Skynet take over already. I'm tired of this shit.
It seems that short interest has a little farther to fall yet. Maybe even to new lows assuming that the ass kicking we got this year being short (I loved those numerous overnight ramp ups) has made shorts a little shy to pull the trigger. And therefore the SPY a little further to climb?
Paul Joseph Watson is reporting three carriers parked by the straight now.
"Show of force intimidation method" is in overdrive.
QQQ and SPY short interest is not a clean measure of overall bearish sentiment in the market. Billions of dollars of arb positions have long stock (spx vs spy, ndx vs qqq) vs short etf positions. The overall inventory is determined by basis mispricing in the market (delta neutral, divs, cost of carry) than it is anything else.
Probably old news to some but Jim Willie's article posted at the Silver Bear Cafe this morning gives Tyler and ZH some serious KUDOS.
the 30Y outpacing the 10Y
that is soooooo last year!
OT: Rumor de jour was that 1 spanish bank alone took abt 4 billion from the spanish govt bond auctions. 1 bank.
FX Swap in use
I'm thinking Friday after the market close would be a good time for the S&P to announce some European rating downgrades (remember they downgraded the US on a Friday after market close). The markets will be closed on Monday so a Friday evening announcement would lessen the market carnage. I think that'll be the straw that breaks this bull's back.
http://www.youtube.com/watch?v=i77Q4stQ7aY&feature=uploademail
Uploaded by catoinstitutevideo on Jan 12, 2012
http://www.cato.org/monetary/
The stability given by the Federal Reserve is "between crisis sustainability" according to Auburn University economics professor Roger Garrison. Garrison spoke at the Cato Institute's 29th Annual Monetary Conference held November 16, 2011.
It's nice for Willie CB to mention ZH as independent and most thrustworthy source:
"Actually, the ZH crew merely took the ball and ran with it, as they do so adroitly and consistently. In my opinion, the Zero Hedge web journal is by far the most valuable and broad single source of relevant information in the global financial crisis, bar none"
I like how US stocks shoot up with EUR/USD but are flat when EUR/USD goes down then shoots right back up with EUR/USD when it rises off the lows.
Just graph the SPX priced in EUR....straight up with few shakeouts since August
except the short interest is the people running the prop desks and the banks.
In real news, EURUSD up over 1% today. Stolper not available for comment as Vampire Squid clients get a jump on tax loss strategies for 2012.
http://vegasxau.blogspot.com
Stocks fighting back from deeply oversold levels on robust news, confidence, and the apparent absence of revolution, insurgency, mass suicide and martial law.
Yield on a 1 year Greek bond finally went past 400%
Is sitting at 403%
To infinity and beyond...!!!!!!!!!!!!
edit; baltic dry index dropped again today.
No wonder there was massive short covering. Shorts make their decisions primarily based upon fundamental analysis and that does not work at all in a market purely driven by HFTs and risk on / risk off binary models.
Being short or being long this market is betting red or black.....
I have found that buying on bad news (i.e BLS numbers, etc.) has worked pretty consistently and I'm sure selling on good news would work too ... but, alas there has been no good news
I have a much better explanation: More buyers than sellers. All you need to know.
No, no; in Zero Hedge world it is always merely another squeeze on the shorts. There are no rallys in Zero Hedge World; only short squeezes; it's a kind of alternative universive where you can do anything except make a profit.
Makes 100% sense....THERE IS NO VOLUME...none.
Much like a roller coaster- and you all know what im talking about- when you are going up on the first part...click, click, click....then you have that silence as you hit the top.....before the first plunge as the ride goes on....
Are you sure the clicking isn't the cocking of 100 bear guns
Only if they're preparing to shoot themselves in the foot; again. Which I don't mind.
There have been a lot of articles over the last 40 years, generally talking about the stock market decoupling from the real economy. The summary of all that is that the purpose and motive for investing has changed. My personal favorite is the Bigger Fool Theory. Whatever the investment is, the theory says that there is always someone ready to buy something that you had doubts about buying, in the first place. It used to be that the motive in investment was about building something real. No more, apparently. Today it's more about building numbers on a balance sheet.
http://georgesblogforum.wordpress.com/2011/11/02/the-daily-climb-2/
"Daddy, when will SPY be able to go down 40 cents on the day and stay that way?"
The 2011 high was in in May. Don't think we'll be waiting that long this year.
HFT ramp has caused Bear-exhaustion. ES at 1282 at 10:30 today closes at 1292 ... like watching Ents in slow motion
Short Interest explains recent market rally; my little sister explaining how jet planes fly.
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