The most important part of that post was the following, "In my opinion, there's still a decent chance of a gap opening or something like that early tomorrow that breaks the channel to the upside. As you will see, the bear flag is very well defined and the channel is tight, it would seem to me that the opportunity to break it to the upside before a downside break (during regular hours) would be irresistible."
This morning we have several breaks already despite the gap down. No significant news came out between 9:30 and 9:40 when the market's pushed higher. Basically a lot of traders in after hours and those with their orders to sell/short this morning were trapped, the shorts look to have been squeezed by the looks of price action and we have some upside channel breaks in the major averages.
And remember, I wrote this after market when the trading action had already broken significantly BELOW the channels. This is what I mean when I say, "Retail traders have become so predictable that it makes Wall Street's response predictable".
Crazy Ivan, if you are new to the site, it's a phrase from the movie, "The Hunt for Red October" and a known tactic of the former Soviet submarine fleet. The only way to effectively follow a nuclear armed sub (and this is the job of the hunter/killer submarines on the opposing side) is to get behind them in their prop wash where listening devices can't here the other sub. So the Soviets adopted a strategy called a Crazy Ivan or "clearing the baffles" in which they would do a 180 degree turn and head directly in the direction of any sub possibly following them before returning to the previous course.
That's what I call the price action when there's a likely trend (down), but the stops and limit orders are hit (in this case) both below and above the channel, shaking everyone out of the trade, before resuming the tend (arguably down). So we have our Crazy Ivan this morning in the market.
I encourage you to look at historical charts, especially since 2007. You will see how the market has changed and how in many ways it has become predictable if you can recognize the changes. After all, last night and this morning in extended trading we had fairly definitive breaks of the channels, I still posted my expectation that the breakdown price action wold reverse, it wasn't a lucky guess, it was a guess based on high probabilities based on the market's own action.
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