Short-Squeeze Stampede Sends Silver Soaring; Stocks Surge Off Overnight Slump

Well, that escalated quickly…

In the early trading, Silver prices were up the most since Lehman, with Spot above $30…

Source: Bloomberg

…but as the way wore on the squeeze faded, but still SLV (the silver ETF) was up almost 14% in the last 3 days – the biggest jump since early August…

Source: Bloomberg

Spot Silver reached its highest since Feb 2013…

Source: Bloomberg

Silver futures also soared, but were slammed when the US cash equity market opened, bouncing back after Europe closed…

Source: Bloomberg

But as the paper prices were suppressed intraday, physical demand remained high and the physical premium hit a record high…

Source: Bloomberg

Silver miners all exploded higher on the squeeze…

Source: Bloomberg

…led by Hecla Mining and First Majestic…

At the same time, Robinhood made various headlines intraday about capital raises and lifting restrictions and that, along with some well-placed estimates of the drop in short-interest, sparked weakness in the ‘most shorted’ names…

With GameStop falling back below $250 and accelerating lower into the close…

Amid all of this malarkey, the broad market was extremely chaotic to start February, surging (after its worst week since September) from some ugly weakness overnight to one of its best days in recent months. Small Caps and Big Tech surged 4%-plus off overnight lows… The Dow underperformed…

But there was a weak close…

Most-Shorted Stocks were actually flat today, while hedge fund VIP stocks rose…

Source: Bloomberg

The most-crowded stocks stabilized relative to the most-shorted stocks today, but not dramatically…

Source: Bloomberg

VIX fell back to 30 today…

Amid all the chaos in stock-land, bonds were quiet (unch across the curve)… too quiet given the huge AAPL deal in the cards…

Source: Bloomberg

The dollar was bid to its highest since 12/21…

Source: Bloomberg

Bitcoin bounced back today after some weakness over the weekend…

Source: Bloomberg

Despite dollar strength, oil prices rallied with WTI back above $53…

While silver soared, gold was less impressive, managing only modest gains in its recently tight range…

Which pushed the gold/silver ration down to 64x – its lowest since July 2014..

Source: Bloomberg

Finally, where’s this all headed? With an equal-weighted basket of the 50 most-shorted Russell 3000 Index stocks having posted its best month on record – to the detriment of bearish hedge funds – Bloomberg notes that it’s the question on everyone’s mind as February begins.

Source: Bloomberg

“While we may not follow the same pattern this time, the main point is that several big days of degrossing are not always the ‘end’ of the period as degrossing usually persists, but typically in lesser magnitude, for several weeks to months after,” Morgan Stanley’s prime brokerage unit wrote in a note last week.