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Visualizing A Small Cap Short Squeeze

Tyler Durden's picture




 

Credit Suisse and Goldman Sachs have two indices that track the most shorted (highest short interest) stocks in the S&P500 and Russell 3000 respectively. This afternoon's action shows a considerable outperformance by the Russell 3000 most-short index over the Russell 3000 while the S&P 500 most-short index has stayed relatively well-behaved relative to the S&P 500. It seems smaller cap shorts have had the stuff squeezed out of them today.

Chart: Bloomberg

 

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Mon, 09/26/2011 - 16:03 | 1712665 BrocilyBeef
BrocilyBeef's picture

thus proving the system works!

Mon, 09/26/2011 - 16:29 | 1712776 max2205
max2205's picture

I'd complain about the 2-3% overnight action that fucks everybody but who cares...trade what they give us.

Mon, 09/26/2011 - 16:51 | 1712891 BrocilyBeef
BrocilyBeef's picture

what, it's not like you can't trade during these times...

Mon, 09/26/2011 - 22:08 | 1713645 max2205
max2205's picture

I don't trade 24/7. Lol

Mon, 09/26/2011 - 16:03 | 1712669 Panafrican Funk...
Panafrican Funktron Robot's picture

Meanwhile, gold had a sudden and substantial stiffie right before the 4 pm equity close.  

http://www.investors.com/NewsAndAnalysis/Article.aspx?id=585988&ven=yahoo

They're getting desperate.  

BTFD.

Mon, 09/26/2011 - 16:09 | 1712704 BrocilyBeef
BrocilyBeef's picture

Essentially, this is the stiffie sticking around a bit after the climax. The stiffie is done for now. Eventually, with time, USD will blow another "stiffie".

Mon, 09/26/2011 - 16:23 | 1712754 SheepDog-One
SheepDog-One's picture

The worst thing that can happen to the FED is a rising USD...I wouldnt bet on it myself, theyll do something to mash it back down.

Mon, 09/26/2011 - 16:41 | 1712838 Smiddywesson
Smiddywesson's picture

Tag, you're it Mr. Euro.

Mon, 09/26/2011 - 16:25 | 1712765 Piranhanoia
Piranhanoia's picture

It was Mourning Wood,  for Bretton.

Mon, 09/26/2011 - 16:03 | 1712671 sabra1
sabra1's picture

today was the last chance the insiders had to get OUT! OUT! OUT!.....................................!

Mon, 09/26/2011 - 16:06 | 1712683 BrocilyBeef
BrocilyBeef's picture

I'm still waiting to back the truck up for gold silver lead n' coffee. Dollar index also needs to either go to QE1 levels of early 2009 before I think the end is in. 

Go go US Dollar? Let's Get Real.

Mon, 09/26/2011 - 16:04 | 1712674 Belarus
Belarus's picture

I agree with that one guy: EVERYONE, STOP PLAYING THE FUCKING GAME. I'm sick of "short" covering rallies. Jesus fucking christ. 

Mon, 09/26/2011 - 16:23 | 1712749 SheepDog-One
SheepDog-One's picture

Every time markets are set to collapse, here comes a miracle 'short squeeze'.

Im not too sure this isnt just the FED providing the short squeeze fuel themselves....hell what do they care its all free money to them.

Mon, 09/26/2011 - 16:23 | 1712757 WSP
WSP's picture

Sorry Belarus, short sellers are the only "players" left in the game because most of them know how to read a balance sheet and income statement and know that the U.S. markets are a fiat ponzi scheme casino that are backed by nothing other than fraud, corruption, and printing presses.    The problem is since more and more people are figuring out that the market is a massive corrupt ponzi scheme, the only way to keep it rising is to use short sellers as the primary fuel for rallies.  Whenever the markets sells off a little, the short sellers pile in, and that makes it easier for the banking cartel to squeeze the market higher.  

It is amazing that most people (other than short sellers) do not realize the level of fraud and corruption at the public corporation level.  Corporate CEO's, most of whom would NEVER own any more than "token" shares, use their company's stock to "print" themselves wealth via stock options.   In order to pull this off, they use accounting fraud and other tricks that the banker owned SEC gets kickbacks on, so in the bottom line is widespread corruption.

The only truly profitable companies are private.  The reasons most entrepreneurs take their company public is to "Cash out" and/or drop the risk onto the public.  Why take the risk of your equity in a private corporation when you can sell it to the public, pay yourself way more than you ever could as a private entity, be able to commit accounting fraud and other insider dealings and be rewarded?  

When you add the accounting fraud and corruption in with money managers who get paid to be "parasites" on other peoples money, you have a recipe for a very well coordinated machine that "feeds" off the market and other peoples money.   It is like any parasite that feeds off of a host---at some point the host will die, but it is really hard to determine that.  The only reason the market stays at such lofty levels is that so many people recognize it is grossly overvalued and thus continue to short it.  This could go on for years. 

The best thing to do is pull all your money out of the market and simply don't watch it until all the players go to jail.  Until that time, they will continue using short sellers capital to drive prices up, and as the old saying goes, this could go on a lot longer than short sellers can stay solvent.  The banking cartel hopes that "fresh meat" will continue to enter the market, and that well may be true.  We know for sure that the fraud and corruption will not be prosecuted---the fact it they reward fraud and corruptin as long as you are a "public" company.

 

Mon, 09/26/2011 - 16:33 | 1712803 SheepDog-One
SheepDog-One's picture

Ok WSP...but if shorts are SO smart, then why do they keep lining up daily like Charlie Brown on a Lucy held football to get screwed every time?

Mon, 09/26/2011 - 16:41 | 1712837 WSP
WSP's picture

Excellent question Sheepdog-one.  It is a combination of greed and the fact that it is so obvious to them that the market is grossly overvalued. Everytime they look at a balance sheet and income statement or see executives get away with fraud, they say to themselves "there is no way this can continue" and their natural reaction is to short----their greed takes over backed up by the assurance that at some point free markets will work. 

The problem with short sellers is they do not understand that we do not have free markets----the markets are rigged and frankly, I am not sure what it will take for short sellers to recognize that the oligarch is not going to let them make any money because ONLY THE OLIGARCH is allowed to make money in the markets.

Again, great question and honestly, I really don't know what it is going to take to get people to stop giving these criminals their money. 

Mon, 09/26/2011 - 16:05 | 1712678 RobotTrader
RobotTrader's picture

Bears were destroyed today.

Looks like a major low was put in on Risk Assets today.

Mon, 09/26/2011 - 16:08 | 1712695 Ivanovich
Ivanovich's picture

Your'e right.  The financial markets are so much healthier now.

Mon, 09/26/2011 - 16:10 | 1712707 gjp
gjp's picture

don't know how you would call that a major low with confidence after all the ups and downs over the past two months and given the disastrous fundamental backdrop ... but that was certainly something today.  Normally with market darlings like AAPL and the Nasdaq in general lagging, that would drag the market down.  But miraculously it went straight up.  I'm sure it was for a good reason.

Mon, 09/26/2011 - 16:11 | 1712711 BrocilyBeef
BrocilyBeef's picture

Hello dave.

Mon, 09/26/2011 - 16:13 | 1712719 rocker
rocker's picture

Not if one went short today. This was expected. I notice you have no longs to brag about today.

When the shorts are gone there will be NO Floor under the market. 

This will be the funniest thing to watch as all the bulls cry their eyes out for major losses.

There will be redemption continuation at some point this week too.

Robo, I would suggest that you buy all you can, they will need the help when they spill the supply on the market.

Somebody has to eat it.   Short squeeze's is not a good investment long term.  

Mon, 09/26/2011 - 16:17 | 1712735 SheepDog-One
SheepDog-One's picture

Running out of shorts with deep pockets to screw over for their squeezes....then what?

Mon, 09/26/2011 - 16:45 | 1712861 pods
pods's picture

I had a squeeze once.  She was great.  No strings attached. :)

pods

Mon, 09/26/2011 - 16:48 | 1712878 rocker
rocker's picture

Crash and Burn

Mon, 09/26/2011 - 16:20 | 1712744 dwdollar
dwdollar's picture

Your hindsight is worth 10 fucking cents at least.  I'd charge for it if I were you.

Mon, 09/26/2011 - 16:24 | 1712759 LongSoupLine
LongSoupLine's picture

looks like a major high was put in on risk assets today.

Fixed it.

Mon, 09/26/2011 - 16:08 | 1712693 Deadpool
Deadpool's picture

so if we WERE in a recession (within a depression) the small caps will come out first and strongest. Me thinks they read ahead in the text book.

Mon, 09/26/2011 - 16:12 | 1712708 adr
adr's picture

I like how you can get $23 swings in stocks like Priceline. How can there be shorts left after the same short squeeze nearly every other day for the past month?

why does it seem the 2pm rocket ship is never late?

Over 11k, 2500, and 1500 once again.

If the retail investor stops playing then you only leave the big guys holding the bag. Just as we discussed in the traders are psychopaths thread, they will eat each other alive as to not be the one holding the worthless paper in the end.

I vote Goldman as the bag holder fighting it out with Morgan!!!!!

Also I guess its back to $85 oil in short order. Under $80 must be an algo death sentence.

Mon, 09/26/2011 - 16:13 | 1712721 BrocilyBeef
BrocilyBeef's picture

that's one hell of a marriage. must be great make up sex. $$$

Mon, 09/26/2011 - 16:19 | 1712729 SheepDog-One
SheepDog-One's picture

Doesnt make any sense to me, day after day the shorts line up like Charlie Brown on a place-held football to get screwed once again?

Im not even all too sure about this 'daily short squeeze' story anyway, not really buying it.

Well at least at some point soon the shorts will learn their lesson and sit it out, if thats whats actually going on. I think its just as likely the FED itself is providing the short load to squeeze!.

Ive been saying since TARP started, if people just dont play this rigged game the insiders will tear each other to shreds quickly. I guess the 'traders' just insist on being eaten alive first though.

Mon, 09/26/2011 - 16:13 | 1712725 SheepDog-One
SheepDog-One's picture

Well maybe the 'shorts' are finally our of ammo. I'd love to see no shorts in the markets and let them try to ramp stocks then...sooner or later its coming.

Mon, 09/26/2011 - 16:25 | 1712764 Robslob
Robslob's picture

 

 

I see it different dog...my take is the Fed & Co has steal all that money back from the hedgies they gave my tax dollars to so generously over the last 3 years...and once that capital is recovered we can then proceed to a disorderly rout in stocks.

 

Remember these guys were supposed to buy enough consumer goods with their profits and apparently did not "consume" enough goods for the goal seeked GDP by the Fed.

 

In Summary: No Shorts For You 1 Year!

 

Sincerely,

Ben & Co

Mon, 09/26/2011 - 16:31 | 1712798 SheepDog-One
SheepDog-One's picture

Actually I suspect whats going on is the FED themselves are providing the fodder for the daily short squeezes.

Mon, 09/26/2011 - 16:52 | 1712897 spongeBOB
spongeBOB's picture

I'm reading the FED is going to be buying treasuries 12 times a month (and sell TIPS once a month) under the announced OP-Twist. Does this mean we are back to the days of POMO where they ramp the markets with the FEDs money?

Mon, 09/26/2011 - 16:22 | 1712752 Waterfallsparkles
Waterfallsparkles's picture

Nothing like managing the Market with Short Squeezes.

Crash it in the Morning get everyone to short on the way up and keep pushing it higher.  That way they can sell into strength and catch everyone by suprise.

Mon, 09/26/2011 - 16:22 | 1712753 Waterfallsparkles
Waterfallsparkles's picture

Nothing like managing the Market with Short Squeezes.

Crash it in the Morning get everyone to short on the way up and keep pushing it higher.  That way they can sell into strength and catch everyone by suprise.

Mon, 09/26/2011 - 16:24 | 1712763 SheepDog-One
SheepDog-One's picture

How long can they depend on that happening daily? IF thats actually whats going on, which I doubt.

Tue, 09/27/2011 - 06:56 | 1714134 Waterfallsparkles
Waterfallsparkles's picture

It is becoming a pattern.  For the last 3 weeks they have huge rallys on Monday and then a follow thru on Tuesday.  Then Wed, Thur and Fri the Market crashes.

Mon, 09/26/2011 - 16:24 | 1712761 LongBalls
LongBalls's picture

I have a pretty strong stomach but this crap has me puking my guts out! All indications of global liquidity problems within a fractional banking system lead to printing and nothing but or it all comes down. For crying out loud, even the IMF says it may need a bail out today. Yet gold and silver get whacked! Silver down 43% in 2.5 days? WTH?

Mon, 09/26/2011 - 16:29 | 1712778 SheepDog-One
SheepDog-One's picture

Its pure insanity at this point...nothings changed, if anything things are far worse, everyone needs ongoing ever increasing bailouts....and GOLD and SILVER are what ends up taking it up the ass? This is totaly fucked...and people WILL stop playing, forever.

Mon, 09/26/2011 - 16:34 | 1712804 Robslob
Robslob's picture

 

 

When gold and silver take it up the ass I provide the KY by buying more..more...more!

 

Thank You PPT, Ben, Central Banks...the gift that keeps on giving!

Mon, 09/26/2011 - 16:35 | 1712807 mynhair
mynhair's picture

Bogus EOQ window dressing for the uummpth time.  This is old news.

Mon, 09/26/2011 - 16:40 | 1712832 mynhair
mynhair's picture

Be nice to see daily Excess Reserves at the Fed, but that would require 'transparency'.

Mon, 09/26/2011 - 16:49 | 1712879 pods
pods's picture

Must be all the problems were solved when I wasn't looking?  

Back to coke and hookers I guess.  

pods

Mon, 09/26/2011 - 17:03 | 1712940 Smiddywesson
Smiddywesson's picture

If you are a big guy who wants to distribute and get out, you can't just sell or you will run down the price on yourself, so you use two tricks to get out.

When the rock stars of the bull market fail, you just move to new rock stars and hang tough, but when that gets too risky, you have to sell into strength and buy weakness to slowly step away from the table.

The second method [This is a theory I have had for some time] is they move from a few highly concentrated positions in the new rock stars to a large number of smaller positions in small and mid caps.  Since this doesn't take money out of the market, it goes unnoticed by the average Joe who only looks at the index levels.  More importantly, it allows the Boyz to cash out without crashing the prices on themselves because the position to market cap was carefully selected to allow them to exit.  Summary:  The small and mid caps should surge just before we go over the cliff, and that's why those shorts are getting sqeezed.

 

Mon, 09/26/2011 - 18:05 | 1713089 Waterfallsparkles
Waterfallsparkles's picture

JPM sent out a note that Aapl supply chains showed lower shipments.  About mid day the changed their mind and said that, gee we really did not mean that.  We still like Aapl even if they will sell fewer I Phones.

Talk about Market Manipulation.  They in essence downgraded them and then reversed their original analysis.

Mon, 09/26/2011 - 18:39 | 1713148 dcb
dcb's picture

I love ZH content, buit over all you are really shitty traders. You acknowledge the rol of hft in market manipulation, but then don't chart it correctly. what is going on now isn't a short squeeze at all (that implies people acting to do something). it is filling the gap down and going back up to the down trend line. you see this all the time9 Last week was classic. We had a huge european sell off, opened hugely lower. it wasn't a further sell off, but a buy, we then went back up to the trend the next day and finished the day lower. you can also look at udn (this happend with s and P0, you see it all the time with tbt. it's no a short squeeze, it ma you need to chart it very well. Look I am happy to provide charts, never going to listen anymore to your trades (the guy who talks about the different between the basket and equities seems to know what he is talking about, it's a different analysis than me but gives the same results. this gap will be filled, and it should go abouve that gap. if you say this getting short squeezed, we don't it's programing. run the wweekly tlt and you wuill see, or the udn, don't use daily charts, use the weekly. it's easy, and you should be upset that you don't chart it that way.

Mon, 09/26/2011 - 20:23 | 1713417 long-shorty
long-shorty's picture

Any day The Fresh Market is up over 5% is pretty much the definition of a short squeeze in small cap stocks.

 

Mon, 09/26/2011 - 23:29 | 1713752 Godisanhftbot
Godisanhftbot's picture

 not really. that assumes the buyers are shorts, and not bottom fishing longs.

 

 the guys is right, not too many real traders here

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