"In light of continuing deterioration in macroeconomic data (we don't remember
when the last time was that we had a materially better "than expected" data
point) many are left wondering how it is possible, that when seeing broad signs
of capitulation even among the permabullish contingent, the market has resumed
its ceaseless levitation. Simple - as David Rosenberg recaps our post from two
days ago, "Short interest on the NYSE and Nasdaq surged nearly 4% in the
second half of August; these positions are now being squeezed, which is the
"buying" support" the market has been experiencing in the low-volume rally of
the past few sessions." Indeed, as long as the weakest hands who piled on the
shorts into the latest market plunge are not cleared out, the current episode of
no-volume levitation will continue. Sprinkle one or two favorable headlines
which sends the robots into a frenzied bullish bias churn, and one can see why
it may be time to whip out Birinyi's ruler.
From Rosie:
MORE SIGNS OF CAPITULATION?
Remember, it is not at all unusual to see the stock market enjoy a relief rally after the initial 20% leg down in a cyclical bear market. For example:..."
at http://www.zerohedge.com/news/david-rosenberg-market-capitulation-and-how-expect-short-covering-squeeze-play-out
From Rosie:
MORE SIGNS OF CAPITULATION?
- The USA Today consensus showed that strategists have cut their year-end S&P 500 targets by 8%.
- Wall Street economists are at 40% recession odds, which means if the heads of research allowed them to really say what the probability was it would be 80%.
- Bank of America let its chief equity strategist go who was calling for 1,450
- on the S&P 500 and the most bullish seer out there (we wish him well).
- The AAII investor sentiment survey shows 30.2% bulls and 40.3% bears.
- The Investors Intelligence survey also did a switcheroo, with the bull camp in the past week down 3.2 percentage points to 35.5% and the bear share rising the same amount to 40.9%. That is the largest number of bears since March 2009 (was 21.5% at the July market peak). And we have the fewest bulls since the August 2010 retest of the lows back then. The "spread" is now -5.4% between the bulls and bears, well off the +28% gap at the July market peak.
- Short interest on the NYSE and Nasdaq surged nearly 4% in the second half of August; these positions are now being squeezed, which is the "buying" support" the market has been experiencing in the low-volume rally of the past few sessions.
Remember, it is not at all unusual to see the stock market enjoy a relief rally after the initial 20% leg down in a cyclical bear market. For example:..."
at http://www.zerohedge.com/news/david-rosenberg-market-capitulation-and-how-expect-short-covering-squeeze-play-out
