This is an epic short squeeze. Hedge Funds are on the wrong side of this as Price Momentum is underperforming Value. In addition, most of them likely got net short near the lows. Long Price Momentum and short Value was last years relative trade so as the market goes up hedge fund longs are going down or up less than value stocks. Hence they are losing money in a rising market which is a cardinal sin. Nigel Tufnel of Spinal Tap is turning the short squeeze up to 11 next week as we are not quite done yet. My DeMark experts tell me a sell set up emerges sometime next week but from what higher level? I have protected myself in the insanity and my P&L has been flatish over the last week.
I also want to let you know the market has become very binary due to the NYMO extreme reading above the 94 level. This has only happened 44 times prior to this one since 1941. All readings resulted in a pull back but 37 of those went on to new ATHs while the other 7 resulted in swift pullbacks of 20% on average. My buddy Tim Wood and I discovered this fact and the signal that tells us which outcome will result. I am not going to divulge that signal as that would be insane, however, I will let you know what I do when the signal is confirmed. I am 80% sure the bearish result will ensue but because this signal is so binary I am prepared to turn bullish and get long for the first time in 2 years. Stay tuned as the end or the beginning is nigh. Don’t be fooled by the fact that the odds of bullish occurrences favors the bulls because if we are in bear market the odds of the bearish outcome are 100%. The real question question is has the bear market ended?
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