The Cock Fight

Yesterday was close to forming the rare PBR setup on the S&P future contract.  The characteristics are a P-shaped short squeeze profile followed by a b-shaped long liquidation profile.  Both profiles on their own signal the movement in price to be a temporary phenomenal fueled by shorts covering their positions or longs liquidating, respectively.

When you see the two profiles sequentially, it signals a dangerous environment much like a cock fight.  The moves are violent but until a cock digs their talons into the other fighter the play is to fade back to midpoint.

You can see the naked VPOC was finally closed up yesterday, that point has been on my mind several sessions as it lingered below.  We saw a decent reaction by the buyers down at 1490.25 making it a VERY significant reference point going forward.  Should we not see buyers remerge at these levels on a retest it could signal the environment has changed and reducing equity exposure prudent.

Elizamae asked me a few days back on my thoughts regarding the lack of auction in the four point range surrounding the 1500 century mark. I’ll reiterate that it resembles a bird fight, put that imagery in your brain. Violent flapping and chest puffing are the norm. Think Twitter. If we see a health auction of these levels today, the next move is our tell. Otherwise, the cock fight continues. Until proven otherwise, however, the prevailing trend has the edge.

http://youtu.be/nze096dqID0