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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Maybe you would consider sharing your finding inside the hallowed halls of #EXODUS where men clad in burlap smoking wooden pipes gather to bank coin.
First time in two years.
What a passive way to lie.
You was bullish majority of last year at ATH.
Stop the shenanigans
I take that back I thought you was the fly
ApologieS
melt gold and ornament your lawn with it, give it away to strangers. it is of no use.
Maybe you should not listen to Cramer about ATH’s coming?
Not sure what I just read. I think ?
Notes being made in diabolical fashion….
Fuck an Ark!
I’m building a battleship over the next 25 days.
The black flag will flap in the wind with the words “BLUESTAR IS GOD” etched into the fabric as the steel ship sinks peasants in row boats
good post Blue, confirms a lot of others seeing the NYMO set up.
http://www.thetraderisk.com/not-your-run-of-the-mill-short-covering-rally/
I think (hope) there is a 20% upside
in $C
Blue, regularly read your posts, but this post has me somewhat puzzled. Are you thinking long term bull/short term bear or long term bear/short term bull?
Thank you for your perspective; always find it insightful and refreshing.
Get off your knees, brahh..
Nice.
My interpretation of this blog post is that if we’re indeed in bear market then we’re 80% chance for the like of 20% decline, despite the low historical odds of 7 out of 44. If the bear market is over, then we have the odds of 37 out of 44 of going ATH.
Not to speak for bluestar himself, but what he’s saying is if we are in fact in a bear market, there’s 100% chance of going down around 20%. If not bear market, we make ATH. The 80% is his own personal opinion of the type of market we’re in.
boyaj & sbrdude,
I am fairly certain (80%) this set up resolves bearishly, however, we must respect the data if the market doesn’t roll soon I will need to reassess.
The spinal tap squeeze looks set to continue. I expect higher prices and higher NYMO readings. This squeeze will go down in the history books. I am stalking this like a wolf. I want to see the last dying breath of hedge funds covering their shorts.
Basically The higher this goes without a significant pullback the more bearish I get. What would make me less bearish would be a pull back of say 5% then a rally beyond the previous high. Once we turn it should pick up speed to the downside. I have basically huge amounts of dry powder to take advantage of this set up. Unlike before the October rally, this time I took a lot of profits in February when I realized how fashionable my view had become. I have shorted some additional individuals names but I have avoided puts and adding index exposure. The next leg down should be brutal for all but the smallest and most nimble of traders. Good luck all.
Can anyone explain 2 me why Treasuries AND equities are selling off?
All but gold and shit. (I get why precious metals r rallying)
Why the hell is the curve flattening so much?
I did say epic short squeeze, Did I not? One for the ages.
Been watching IG and HY spreads tighten in magnanimous fashion
Bluestar, thanks for your work, you have been right more than wrong and more importantly your open about your thoughts and you can tell in your writing there is no agenda.
Could these NYMO readings be signals of massive institutional buying?
Moneybagz,
Thanks, and I like to say I am often wrong but never in doubt. Strong NYMOs have 2 interpretations. The first is bullish if one is in a bull market as it means that there is enthusiastic buying. But then we get a pull back. In a bear market we get the same reading but it is mostly short covering. So it really depends if we are in a bear or bull market. The 200 day o the SPX is sloping down after 7 years of sloping up. Since May the trend is lower highs with lower lows over time. The structure is bearish. The rally we have had does not scream bull market to me and the bearish structure that has been in place has not been erased by this rally. The 200 day looks awful still.
I reckon the SPX goes to 2040 – 60ish. But worth scaling in a short now.
Hindsight, this was an epic post.