It is now widely understood that the biggest "buyer" behind the vicious snapback rally since late September was not a buyer at all, but sellers rushing to cover their shorts (See "It's Not A Risk-On Rally, This Is The Biggest Short Squeeze In Years" Says Bank Of America). And, as we reported last week, someone has been happy to take advantage of this covering scramble: "Smart Money" Sold Stocks For Third Consecutive Week To Scrambling Shorts.
But it is not just shorts buying and insiders selling. One other, quite persistent force has reemerged and contrary to the speculation that corporations are currently in an stock repurchase blackout period, the reality is anything but.
Here is Bank of America:
Buybacks by corporates accelerated for the third week, and are above levels we saw this time last October. Net buying was chiefly in large caps... while mid-caps also saw small inflows but small caps saw net sales.
- Corporate buybacks were largest within Consumer Staples last week, similar to in prior weeks.
- Discretionary and Tech saw the next-largest buybacks
Speaking of buybacks, later today we will present one previously unseen chart showing just where all the money to fund said stock repurchases comes from, but in the meantime, here as we first showed on Monday, is a chart showing that anyone expecting buyback activity to slowdown in the last two months of the year, will be severly disappointed: it is then that nearly a quarter of all annual stock repurchases take place to assure management teams they close the year with their stock as high as possible just as stock-linked bonuses are calculated.