Short sellers have been cowered as they are extinguished by the Federal Reserve's plan to manipulate prices "higher than they otherwise would be". In normal times this hodge podge of indicators (margin debt surging up, investor confidence off the charts, short sellers giving up, et al) would be a contrarian investors dream. But we don't live in normal times as central bankers are backstopping every asset on earth - debt or equity. In the theater of the absurd yesterday a country with 200% debt to GDP (Japan) offered to provide funds to Europe's bailout package. The grand shell game continues - but as Chuck Prince once said, we dance until the music stops. The addendum to that is "and then we wait for the next multi trillion program by the Fed to fix the music."
- Bets against the Standard & Poor’s 500 Index fell to a one-year low. Short interest on the S&P 500 dropped to 6.87 billion shares, or 3.9% of shares available for trading, as of Dec. 31, down 5.7% from two weeks earlier. It was the third straight period that S&P 500 short selling fell.
- The benchmark measure of U.S. equities completed its sixth straight weekly gain on Jan. 7, the longest winning streak since April. “Most investors can see that momentum is going forward and they are reducing this risk trade because the odds are not in their favor,” said Daniel Genter, president of RNC Genter Capital Management in Los Angeles, which oversees about $3.7 billion. “There’s a lack of volatility, which makes it tough to short on a daily basis, and the upward momentum means it’s a losing proposition to bet against stocks in the longer term.”