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Short Sellers Increase Bets Across the Board
Posted: January 26, 2012 at 6:33 am

For the first time in a long time, short sellers have increased their bets that the stock prices of most large companies and in most large sectors will fall. The NYSE and Nasdaq released their figures for short positions as of January 13.
Short sellers increased their positions in all four of America’s large banks. The short interest in Bank of America (NYSE: BAC) rose 18.5% to 186.1 million. The price of its stock, and most other bank stocks, have risen as it appears that the worst of their balance sheet problems have faded some. Shares sold short in Citigroup (NYSE: C) rose 19.1% to 50.3 million. The short interest in Wells Fargo (NYSE: WFC) was up by 11.4% to 47.1 million. Shares sold short in JP Morgan Chase (NYSE: JPM) were up by 21.5% to 40.6 million.
Shares sold short in the two big car companies also rose. The short interest in Ford (NYSE: F) was up by 14.7% to 147.1 million. Shares sold short in General Motors (NYSE: GM) were up 13.7% to 62.3 million.
The short interest in almost all major tech stocks was up as well. Shares short in Microsoft (NASDAQ: MSFT), which posted relatively good earnings, were up 49.8% to 101.5 million. Shares sold short in Intel (NASDAQ: INTC), which also posted strong numbers for the fourth quarter, rose 12.2% to 131.8 million. The short interest in Dell (NASDAQ: DELL) was up by 6.1% to 69.9 million. Shares sold short in Oracle (NASDAQ: ORCL) were up by 40.8% to 27.4 million.
Douglas A. McIntyreRead more:

Short Sellers Increase Bets Across the Board - 24/7 Wall St. http://247wallst.com/2012/01/26/short-sellers-increase-bets-across-theboard/#ixzz1kbrsS085

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Well there must be a reason why all the big boys on the street are betting the market short.
Are they right? Or is just the expected sentiment (too bearish) that will be a catalist for the opposite?

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How can an economy be improving when one of his load bearing walls is still crumbling down? New home sales worst ever year... On the opposite, it is being said also in the news sources that foreclosed homes have been rising in price, with Detroit as having one of the greatest increases. Really? But lets see, in Detroit where you can buy a foreclose home for as little as $500 so now it is being bought for $550. Why don't we look at the secondary retail real estate markets and see how prices for previously owned homes are improving there? You will probably see price improvements near to none.

So it seems to me that real estate prices may be near a botton, but not quite yet. Now, the question is how long is it going to be before we see any sustantial recovery on home prices? That there may give you a good indication of how long it is going to be before the economy in general starts to pick up.

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And that is not all - Check this mask:
So MarketWatch Head liner says -

Now take a look at the charts of the Dow and SP500 - except for the artificial (premarket) rally posted on Tuesday 3, 2012, I am not seeing any rallies.  The organic movement of the markets after the initial artificial rally on Tuesday is nowhere but down.
So how is that for masking?

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Matthew Lynn's London Eye Archives | Email alerts

June 14, 2011, 5:41 p.m. EDT

How to profit from the coming Greek default

Commentary: Five trades to make before the euro implodes

 

By Matthew Lynn

LONDON (MarketWatch) — You don’t exactly need a crystal ball to know what the biggest event in the financial markets of the next 12 months is going to be: Greece defaulting on its debts.

This week Standard & Poor’s cut its rating on the country to CCC, the lowest of any nation in the world. Only last week we learned that Greek industrial production was down 11% year-on-year. Unemployment has risen 40% over the past year, and now stands above 16% nationally. A year on from the European Union and International Monetary Fund “rescue,” Greece is slipping into 1930s-style depression.

A country in that kind of a fix doesn’t pay back debt. Nor does it get its deficit under control. It isn’t a question of whether Greece defaults anymore. Everyone accepts that. It is simply an issue of when, by how much, on what terms — and, perhaps most crucially of all, who gets stuck with paying the bill.

Forget all you’ve read about it being a catastrophe for the markets when it happens, however. Only things that nobody really forecast make prices move in any dramatic fashion. A Greek default is about as unexpected as Rafael Nadal making the finals at Wimbledon this year.
In reality, it is already priced in. And the Germans and the French aren’t going to let it happen until they know their banking systems are safe — so there isn’t going to be a Lehman-syle collapse.
What a Greek default will do is focus everyone’s mind on the breakup of the euro. Once countries go broke, the euro will have taken a decisive step towards dismemberment. The markets will start figuring out who the winners and losers are from that — and pricing that in as well.
So if the euro isn’t going to be around in five years time, how do you position your portfolio for that?
Here are five trades you should start thinking about:

1. Buy German bunds, and sell the DAX index /quotes/zigman/2380246 DX:DAX -0.25% . The new deutsche mark that will emerge from the wreckage will be one of the strongest currencies in the world. That will be great for German bonds, but bad for the country’s mighty exporters, whose shares are the leading constituent stocks of the blue-chip DAX index. Over time, German companies will learn to adjust to having a strong independent currency again. They coped with it perfectly well in the 1970s and 1980s. But it will take time — and exports will suffer in the meantime. That will be bad for profits, and bad for share prices.
2. Sell the Swiss franc /quotes/zigman/4868123/sampled USDCHF -0.01% . Investors have been piling into the franc because they don’t have the deutsche mark as a safe haven anymore. The Israeli shekel /quotes/zigman/4867989/sampled USDILS +0.01%  has some supporters — including this writer — as a currency that’s going to appreciate through bad times as well as good, but it doesn’t have a thousand years of peace and prosperity behind it the way the Swiss franc does. So right now the Swiss have that market to themselves — as the strength of the franc makes clear. But with the deutsche mark back in business, a big chunk of that safe-haven money will shift back across the border. The Swiss franc will be on the way down again.
3. Sell the Belgium index /quotes/zigman/627399 XX:BEDOWD -1.01% . As the European Union grew in power, Brussels emerged as the capital of a nascent super-state that for a time seemed able to rival the United States. Every big company needed a platoon of well-paid lobbyists taking people out for expensive lunches. With the euro on the rocks, the EU will be halted in its tracks, and all of that will disappear. Brussels will just be a place where you can buy some nice chocolate while changing trains. The country’s economy and its leading companies will all suffer.
4. Buy European travel companies. With the euro gone, the peripheral nations will see their currencies fall dramatically, while the core will see theirs appreciate. One consequence will be that it will be dirt-cheap for northern Europeans to go on holiday in Greece and Spain and Portugal again. A traditional pattern of trade will emerge. Northern Europeans make luxury automobiles and machine tools for the world, then two or three times a year relax by sitting by the Mediterranean for a couple of weeks enjoying themselves and spending all that money they earned. That will be great for everyone involved in shifting people from place to place — the tour operators, the airlines, the aircraft manufacturers, and the travel websites. All of them will see their profits soar.
5. Sell the U.S. banks /quotes/zigman/311044 XX:GSPFI -0.52% but buy the dollar /quotes/zigman/4867933/sampled EURUSD +0.06% . If everyone knows Greece will have to default, what’s keeping them from pulling the plug? That’s easy. The Germans and the French won’t want to ‘re-profile’ all that Greek debt until they know their banks /quotes/zigman/116452/quotes/nls/eufn EUFN -4.48%  have largely sold both the debt and the credit-default swaps associated with it to someone else. They aren’t stupid — they aren’t about to blow up their own financial system. Who’s bought it? It looks as if the U.S. banks have wound up owning a lot of Greek debt. The Asian /quotes/zigman/116464/quotes/nls/fefn FEFN +0.61%  and Middle Eastern banks  may have a lot as well. When the default happens, they will be the ones who take the brunt of the losses.
The dollar will gain, however. The euro was a serious contender to take its place as the global reserve currency. With that out of the picture, the dollar will get another decade as the main currency of global trade. Its weaknesses will catch up with it eventually — but the day of reckoning will have been postponed.
There will be plenty of other consequences. Spain will be looking shaky. Italy may recover from what has been, in effect, permanent recession since it joined the euro. But those five trades should at least be enough to let you join the Germans and the Dutch on one of those dirt-cheap vacations in Rhodes or the Algarve.

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