‘Katie-Bar-the-Door’ Time for Evergrande Speculators?


Bears had a rare chance to get short with impunity last week — arguably the first such free-money opportunity since the bull market began more than 12 years ago. With the Evergrande saga unfolding in real time, shares appeared to be doing a Wile E. Coyote ahead of Friday’s opening. Their gravity-defying behavior reflected one of those deft manipulations where DaBoyz greet whatever fragile bids show up in the early going with a feather-light touch. On Friday, playing it by the book, they scaled back their offers until the very last of the idiots from Mars doing the  buying were fully satisfied. The result was that stocks hovered aloft for just long enough that traders who had gotten things exactly right — i.e., realized that Evergrande‘s failure could make the 1998 collapse of Long-Term Capital Management look like a furniture-store liquidation — must have begun to doubt themselves.

It was only after the opening bell that they came to their senses with the apparent realization that any selling done on Friday was all but certain to look fortuitous come Sunday evening.  Stocks began to fall, but not nearly as steeply as they are likely to fall in the days, weeks and months ahead. Indeed, I am publishing this commentary ahead of Sunday’s resumption in trading to drive home my point, which is this: Evergrande’s imminent implosion could turn out to be the biggest speculative collapse in history. It is going to take down many big players, causing a chain reaction that will definitively end the buying mania that has gripped shares since Covid-19’s “bullish” failure to put civilization into eclipse.

Up to Their Eyeballs

For now, don’t believe talking-heads blather about how Black Rock, Goldman Sachs et al. hold only relatively small stakes in Evergrande.  The truth is, when you connect up the dots, toting up derivatives exposure tied to Evergrande’s epic real estate portfolio, they are all in it up to their eyeballs. Traders and investors should therefore treat every rally as a gift, and every Wile E. Coyote pause in selling as an anomaly. The tempo of the selling is certain to accelerate, and short-squeeze rallies to grow more violent; it will be increasingly difficult to get short. But there should be little doubt that bears have finally got the wind at their backs. The chart above shows that they have some technical support as well, in the form of a recent E-Mini S&P top at 4503, a Hidden Pivot rally target that was a decade in coming.

  • john September 26, 2021, 8:34 am

    I know it’s not related, but show this to the world
    The pandemic is to force you to get the vaccine.
    The vaccine is to force you to get the vaccine passport.
    The vaccine passport is to force you into the social credit system.
    The social credit system is to force you into obeying the government.

    All the facts in one place

    Sign of the devil and the all seing eye right in your face in the billboard add picture

  • John September 24, 2021, 9:31 am

    I think people are being fooled with this story.
    The CCP changed their rules prior knowingly that evergrande would be in trouble.
    The CCP guys are not stupid you know.
    It’s their way of sending a message to the others and cool things off, before a real contagion occurs.
    Don’t drink the kool-aid narrative of the reporter cheerleaders.

  • Rich Cash September 20, 2021, 2:41 pm

    Both Sides Now

    Filled Buy to Open 40 SQQQ Sep 24 2021 7.5 Put Limit 0.04 — — 14:33:30 09/20/21


  • Ben September 20, 2021, 8:39 am

    So we have covid, geopolitical disaster in Afghanistan, Evergrande collapsing, the Dead Sea turning red, Pennsylvania out of liquor…



    It’s like 2020 decided to happen again, but all crammed into the last few weeks!

  • Rich Cash September 19, 2021, 6:17 pm

    PS. The King of Soul, son of a Baptist Minister, died at 33 in 1964 when a hotel manager shot him for chasing a white girl into her office. He left his young wife and two surviving children. Their four year old had drowned in a pool.


    That same year widow Jackie O made a rare public appearance at a UN Concert and $1.293 silver was cut from US silver coins, cueing a great inflation that capped the stock market that had just broken even in real terms since 1929.

    Some people still hold so-called junk silver US coins with 90 % silver.

    They currently sell at 200 times face value when you can find them.

    Hi Ho Silver Away


  • Rich Cash September 19, 2021, 5:52 pm

    ‘furniture-store liquidation’
    A Persian Carpet Store at the Marin Mill Valley Mt Tam Junction profitably went out of business for two decades.

    This market does go down as well as up.
    What I like about your writing Rick is you are not afraid to deal with that reality.

    Unlike major media complexes claiming CCP superior to American Capitalism that lets losers fail to avoid moral hazard. Or did. And of course CCP will backstop

    The Three C’s of Complacency, Concern and Capitulation need another C to reflect reality, Contagion.
    Maybe it is not a coincidence that a Fed Officer sold his REITs after distracting widespread claims of Insider Trading, before EVGPY hit the wires.

    Ask Dianne Feinstein Blum (ALLO, CBG/USPS, TPC, URS/EGG), Nancy Pelosi (AAPL, FB, GOOGL, TSLA,V) and Chuck Schumer (IDMCQ) about insider self-dealing timely trades, with FactCheckers, FBI and multimedia covering up for them.

    Recall DiFi senior member of Senate Intelligence while her driver spied for CCP 20 years.

    Always interesting to see how the 6th and 7th richest members of Congress became rich on $223,500 and $174,000 salaries, while little people like Martha Stewart and Leona Helmsley went to jail for breaking our laws.

    The Fifth C, Corruption, always seems to come out around market tops.
    Of course commies and socialists reflexively deny that to cover ill-gotten assets.

    One of these days a change is gonna come