We rarely open a new position in the closing minutes of a session, let alone on a Friday moments ahead of the closing bell, but we did so last week, shorting the QQQQs three ticks off what turned out to be the intraday high.  Betting against the house, we bought some October 48 puts for $1.31 just as DaCubes were kissing a Hidden Pivot rally target at 48.29 that had been sent out the night before.  We must admit that the trade, now nicely profitable, looked like a goner from the start, judging from the way stocks closed near their very highs that day. We’d expected them to pull back back from the modest peaks they’d achieved, leaving intact for another day a thick slab of supply created earlier in the week. Instead, DaBoyz goosed the broad averages into the finale, impaling the aforesaid slab and setting the stage for a Monday short squeeze that astounded us simply by not occurring. 

Chalk up the short-squeeze-that-wasn’t as yet one more sign that we are not in Kansas any more. Something has changed, and the stock market’s ability to scare hell out of bears has noticeably declined in recent weeks, notwithstanding the perfect storm concocted the previous Friday by Bernanke and Friends, when the Fed announced a cut in the discount rate just as the August call options were about to breathe their last.

And to what end?  Our colleague Larry Amernick notes that before the Fed acted, there were already billions of credit dollars going unborrowed, as evidenced by a spike in U.S. depository institutions’ net free reserves. Whatever the case, Wall Street did not pause for reflection that Friday any more than a cow would have paused to reflect on the proper response to a cattle prod shoved up its….  The Dow exploded for nearly 300 points in the opening minutes, raising the prospect, yet again, that bears might have to suffer one last fling at 14,000 before stocks do the Right Thing and begin to discount the specter of economic catastrophe glowering on the horizon.