Once You Go Ack, You Never Go Back

Some, but not all, of the momentum leaders in the market, such as FB NFLX PCLN, have now attained prior peaks, but it anywhere from one to fourteen years ago. The concept of overhead supply should now start to assert itself.

Another name to add to the list is Herbalife. Here we have a legendary story about fellow billionaires ganging up on Bill Ackman to squeeze him into oblivion. On the weekly chart, you can see the round-trip move back to all-time highs from last year.

Overhead supply does not amount to calling a major top. But it does typically mean that sideways or down become more probable than up.

The wild card, of course, is the short squeeze factor. If Ackman capitulates and covers his position, or if the market really forces his hand with a parabolic move higher from current levels, I would expect that to be a short-term factor trumping overhead supply.

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