Photo of the Day: Suckers Being Spoon Fed ~ The Risk Averse Alert

Friday, December 23, 2011

Photo of the Day: Suckers Being Spoon Fed

The CBOE Put/Call ratio's traverse over the past few years tells the story of a distribution of shares into weak hands whose present capacity to absorb supply is challenged...


Every challenge to the market's liquidity-induced, counter-trend rally since March '09 has required an increase in hedging protecting long positions, that those whose credit market exposure has been given a temporary reprieve are not prematurely made to choke on their toilet paper. The level of this protection has even challenged 2008 peaks reached consequent with the market's worst selling.

Once protection has been established and selling abated the CME-driven force-feed to the weakest of suckers has begun. Selling these call options, driving the market higher via the CME, then offloading shares to those with good reason to exercise their call options has been the order of things. The current instance is no exception.

Standing out continues to be the elevated measure of long position hedging via put options necessary to maintain an order whose accomplishment is buying time only likely to further complicate the credit-market unwind once hopelessly unsustainable leverage invariably implodes. Such has been the state of things — the driving force — for longer than most care to admit. Buying time to the same effect of forestalling credit market implosion certainly goes a long way toward explaining how the so-called "best and brightest" forsake due diligence and allowed every sort of weak credit a piece of their Ponzi scheme (think sub-prime and a host of other credit market products).

Laughable are attempts by lenders of last resort to resurrect confidence in this regime. The fat lady will sing and those choking on toilet paper not only know it, but are struggling mightily to conceal their quandary. The CBOE Put/Call ratio makes this reality plain. Not much longer can doom be delayed.

Fast Money
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