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The Bear Squeeze…

By Red, on September 1st, 2010

Thursday Update…

Red

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Wow, what a rally!

I have too admit that I was doubting the bulls there for awhile, and was ready to eat crow on my call of a move to the FP of 111.17 spy… but today’s action makes it look like that level could still be hit.  Of course that doesn’t mean we are going straight up there… without a pullback, and we may have that pullback this Friday?

We had a FP of 105.39 spy today that I seen on my charts, but it disappeared too quickly to screen capture it.  Fortunatly, Anna caught it and here is the link for it.  Woody and Shaan also seen it, so it’s a downside target for sure… the “when” is just something I’m guessing at.

Because the Non-Farm Payroll is out Friday morning, I get the feeling that it will be bad… which will cause the sell off to the FP level.  The other reason is the open interest on the calls and puts for this Friday’s opx… which leads me to believe they will pin it between 105 and 106 area.  So the FP of 105.39 is spliting the difference, and may be the ideal spot for the crooks (errr…. market makers) to close it, so they don’t have to pay out on all the “puts” that expire this week.

Of course this was just a normal technical bounce and the fact that opx was this Friday had nothing to do with (and the Sun is really a big ball of ice too… LOL).  We all know the truth there… Yes, we needed this rally to squeeze out the shorts, but the timing seems to happen around opx a lot?

Ok, from looking at the charts from today, I see a bull flag on the 60 and 15 minute… meaning that tomorrow could gap up quickly in the morning to squeeze out today’s new shorts, but it should turn back down and close flat or lower.  That’s a big “could”, and not a “will” gap up… as the market is very overbought on the short term right now.

Usually a doji will follow such a large up day, but with the Initial Claims and Continuing Claims out in the morning tomorrow, the market could just reverse and gap down?  There is no way to know if the numbers are going to be good or bad?  One the FP tells us that they are going down at some point soon, and it’s usually within 1-2 days on the intraday FP’s.  Will this one be different?  I don’t know?

But right now the open interest, and the FP tells me that we are likely going to hit 105.39 by this Friday’s close.  No guarantees… on speculation on my part.  The charts are saying that we go up to finish the bull flag, but we did pop into the close today… so maybe that fulfilled the pattern?

There isn’t any set rule on how high you go from a bull flag, only that it will likely pop higher at some point.  Well, we popped higher into the close… is that it?  The 15 minute charts aren’t giving us any clues as they are rising up toward the zero level on the histogram bars, but the Full STO’s are almost overbought.

Then the 60 minute chart is about peaked out now, and could turn down at any point.  Since it’s the more powerful charts, that leads me to believe that any pop higher tomorrow won’t last and the day should end with a doji or down.  The daily chart is pointing up now, so that tells me that we will likely go up next week, but that doesn’t mean we won’t sell off for a “B” wave down, if we are in an ABC (wave 2) up now… with a final target of the 111.17 spy FP level.

Of course this assumes the daily chart doesn’t turn back down if we sell off on Friday… which I don’t think it will on only a “one day sell off”.  That would leave the 3 day weekend to calm down the bad NFP numbers and a rally back up next week could happen.

I’m basing this on the charts I see now, and things could changes of course, but I think that we need a positive close on the weekly chart before a large sell off.  Having 4 straight weeks down without an UP week is rare, and if we close down this week then that will make week four.

Ok, that’s about all I got for now… good luck everyone.

Red

Weekend Update - Market Manipulation To Extreme!

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