Last week, when we reported on the then brand new record number of
EUR non-commercial short contracts as reported by the CFTC, we said:
"with such a massive surge in shorts in a short period of time, this means that
the likelihood of major short squeezes is substantial on even the most innocuous
of news, such as a G8 summit which promises much but delivers nothing, or China
once again saying it will gladly focus on growth (as opposed to what?
non-growth?), or some DieBold-inspired leadership change in the Greek
pro/anti-bailout polls. Our advice to FX trading readers: be very
careful with EURUSD stops: it is very likely that in their pursuit of short
covering squeezes, (BIS) algos will take the pair substantially into the
offer-side stop limit buffer just to force short hands out, which in turn may
initiate short-term covering ramps." As of last Friday, the record number of net
short contracts (-173.9K), just rose to a new all time high of -195.4K. The
result: something as worthless and meaningless as uber-volatile Greek
political polls (which had Syriza with a 4 point lead last Friday, which
somehow dissolved and is now in second place about 24 hours later), was enough
to send the EUR higher nearly by 100 pips overnight. Obviously, with ever more
record shorts in the currency, expect the desperate continent to come up with
nothing but more flashing red headlines in attempts to spook weak hands and
incite even more very transitory short covering.
Below is the random number generator on which the fate of capital markets rests:
Below is the random number generator on which the fate of capital markets rests:
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