Weekend Update – Another Bear Squeeze

Monday update...

Another FP showed up that Jim Hobson caught (thanks Jim).  It's of the Russell 1000, (RIFIN) and shows a downside target of 439.63 on the daily chart.  More and more signs are telling us that something wicked is coming this way soon.

Red

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Just when you think the bears are going to win... they dropped the ball again!

Well, what can you say... they didn't call them the "Bad News Bears" for nothing.  While they lose most of time, occasionally they'll win one.  I guess I've always liked the "underdog", and so I rout for the bears all of the time.  But, in this game of baseball (which is just like the stock market)... you're going lose a lot more then you win.

So the bears took another beating on Friday, which took me by surprise I must admit.  While I was expecting an UP day, I was only expecting a move to 1130-1135 spx, not a 20 point rally to happen.  But, I wasn't in any short positions on Friday, so I wasn't hurt by the move up.  I only hope my fellow bears weren't hurt either.

As for next week, what do I see?  Certainly the charts are now mixed with both bullish and bearish counts.  What I'd like to see is a gap up on Monday, and then a sell off to follow.  And, it's quite possible that we'll get one as there are overhead stops above 1150 that I'm sure they've love to take out before plunging the market.

There is an opening price of 115.95 on May the 13th that left a gap that they might be trying to fill?  That's only a 10 point move up in the spx, and it would also clear out all the stops above the 1150 level.  After the gap is filled, the market would then be very overbought on all the shorter time frames.  A sell off could then start down and continue the rest of the week.

We need the daily chart to roll over too, (as well as the weekly also), and if that happens then a really large sell off could become a reality.  I don't know "if" that going to happen or not, but certainly one should be looking to get short on a gap up on Monday.  For how long, is unknown?  I'd basically just close out the shorts once the charts on shorter time frames become oversold (probably by the end of the week).

The price level that they will be at won't be known, as if the daily chart doesn't roll over with the other charts, then the move down could be short lived.  We'll just have to cross that road when we get there.  But even if the daily doesn't turn, a day or two sell off should still happen.  If the daily "does" turn down, then it would be a multiple day down move.

I feel like we are ready to fall off a cliff hard, but with the elections just about 6 weeks away... I just don't know if they will let it happen or not?  As long as the big institutions don't hit the "sell" button, this sideways up and down chop could last awhile.

As for the fake print count (FP's) we have many of them to the downside now... which makes me believe they are going to tank it soon... but when?  We have one for JPM and GS... and now one on Google too.  I don't have any new upside FP's, just the old DIA 118.16 print from March 30th of this year.

My gut tells me that this market isn't going to really collapse until that upside print is filled.  Regardless of me wanting to see it fall off a cliff, into wave 3 of 3 of 3, etc... the reality is that's never that easy.  With the elections coming up in November, and Bernanke saying that they'll do "whatever it takes", means that they will probably put in another secret stimulus package into the market to keep it afloat until the elections are over.

But on the flip side, when that's over with, we know our first major downside target of DOW 8300, which coupled with the FP's on the XEU, XSF and XBP (and the JPM, GS and Google from above), all but confirm that the coming debasement is going to be huge!  The downside FP's are trying to tell us something... and we'd better be listening.

So, with only 1 upside FP from March, and 7 downside FP's... which side you favor?  Let's not forget the new Wallstreet movie was released over this weekend (the 24th), and the Legatus Pilgrimage ended on Monday of this past week.  The timing isn't always exact with them, but a significant trend change has happened around every meeting in the past... will this time be different?

Weren't we going up for 3 weeks into the meeting?  While it's possible that they continue to grind higher, with short lived pullbacks along the way, I still think this coming week could should sell off some.  I think Monday will be the high for the week, and the rest of it is down hill.

The short term charts are looking very toppy now, and even though they put in a bull flag on most of them... I don't think it will go too far.  Just a quick pop above the 1150 level to close that gap (at 115.95 spy) and clear some stops... and then it should be finished.

Monday should provide another excellent opportunity for the bears to get short again.  How far they sell it off it unknown of course, but we do still have the 105.39 FP that Anna caught awhile back.  However, forecasting is never that easy.  I only know that the print will eventually be hit.  Will it be this coming week?  Who knows?

I'd just be happy with a nice multi-day sell off after a Monday morning gap up and crap session.  This market still isn't in a "trend mode" yet, and until it is you must swing in and out of this short moves down (and up... if you like to play both sides?).

The bottom is this... look for a possible move up on Monday, and then a sell off the rest of the week, with Friday possibly being another UP day (due to another opx).  That's what I see in the charts, and that's my best guess for what I expect too happen.  Good luck to everyone...

Red

P.S.  Should panic set in, and margin calls happen on the big institutions, they will be dumping their gold.  Will this be the downside target?  I don't see that anytime soon, as gold is on a tear right now and will likely go up past the 1300 level and continue until the end of the year.  But if it ever does get down that low, it's the buying opportunity of a lifetime, as gold is still in a huge bull market.

P.S.S.  The link I talk about in the 2nd Video for the post by HighRev is here.

Author: Red