A new academic study has made a shocking and highly controversial finding. Suspicious Israeli stock market activity in the days preceding Operation Al-Aqsa Flood on October 7 indicates that a particular party had foreknowledge of the impending attack and used that information to directly profit from the panic that ensued.
by Kit Klarenberg
Part 2 - ‘Suddenly and Significantly’
The academics conclude, “Our evidence is consistent with informed traders anticipating and profiting from the Hamas attack.” Concerns about the paper muddling up profit totals aside, this finding is highly persuasive. Multiple datasets reviewed therein amply show an indeed “significant spike” in short selling in the immediate leadup to Operation Al-Aqsa Flood – and a supremely suspicious one at that.
For example, the shorting of dozens of Israeli companies listed on the Tel Aviv stock exchange “increased dramatically” before the attack. One firm alone saw 4.43 million new shares shorted from September 14 to October 5. On U.S. exchanges, too, there was a “sharp and unusual increase, just before the attacks” in highly risky short-dated options being placed on Israeli stocks, which expired almost immediately after the attack started.
For example, the shorting of dozens of Israeli companies listed on the Tel Aviv stock exchange “increased dramatically” before the attack. One firm alone saw 4.43 million new shares shorted from September 14 to October 5. On U.S. exchanges, too, there was a “sharp and unusual increase, just before the attacks” in highly risky short-dated options being placed on Israeli stocks, which expired almost immediately after the attack started.
Similarly, on October 2, the shorting of the MSCI Israel Exchange Traded Fund (ETF), a passive investment vehicle tracking the performance of the Israeli stock exchange overall, “suddenly, and significantly, spiked.” For context, the authors note this was the 30th-highest daily shorting volume ever experienced by the ETF over the 3,570 trading days leading up to Operation Al-Aqsa Flood. In other words, it was one of the biggest bets on poor Israeli stock exchange performance since 2009.
This shorting “far exceeded” the shorting of Israeli stocks at the start of the COVID-19 pandemic, which briefly produced one of the biggest international stock market collapses in history. In March 2020, the Dow Jones Industrial Average dropped 2000 points, effectively vaporizing trillions of dollars from the global economy, in “the biggest ever fall in intraday trading” yet recorded. No wonder the authors conclude:
This shorting “far exceeded” the shorting of Israeli stocks at the start of the COVID-19 pandemic, which briefly produced one of the biggest international stock market collapses in history. In March 2020, the Dow Jones Industrial Average dropped 2000 points, effectively vaporizing trillions of dollars from the global economy, in “the biggest ever fall in intraday trading” yet recorded. No wonder the authors conclude:
It is extremely unlikely that the volume of short selling on October 2nd occurred by random chance.
Another particularly compelling finding is the identification of “similar patterns” in trading of the Israeli ETF in April 2023 – right when, it has since been reported, Hamas was planning to execute a similar attack. The strike would’ve followed what transpired in October closely but was canceled after Tel Aviv publicly raised its national alert level due to Israeli intelligence agencies catching wind in advance.
The attack was timed to start on the eve of Passover, April 5. Two days earlier, the shorting of the Israeli ETF “peaked…at levels very similar to those observed” on October 2. The recorded volume “was far higher (by an order of magnitude) than other days prior”:
This evidence strengthens the interpretation that the trading observed in October and April was related to the Hamas attack, rather than random noise.
This evidence strengthens the interpretation that the trading observed in October and April was related to the Hamas attack, rather than random noise.
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