Some Closing Charts

So what did we see at the end of the day instead of selling in to the close, a SHORT SQUEEZE!!!

That doesn't mean there wasn't distribution in to it, but it's neither here nor there as they are intraday signals and not really all that important to our strategy.

 Here we have the SPX and the former closing highs at the red trendline to the right.

At the close, we see a short squeeze, small, but a squeeze as price moves above that trendline which I may not have drawn exactly perfect. This is what a short squeeze looks like, there are few if any pullbacks, it's just a snowball effect.

A quick look at some charts...

 DIA 1 min intraday shows a leading negative divergence, this suggests that the DIA was seeing distribution in to today's gap up. This is also only a 1 minute chart, it doesn't have much weight except on very near term trade. Looking at this, I would expect a little backing and filling on Monday, BUT we are in short squeeze territory, if we get some positive sentiment over the weekend, this divergence will be run right over by a short squeeze.

 DIA 60 min, this is where the trend really counts, only a daily or multi-day chart is more important. The small negative divergence on May 1, you may recall. We even knew how the second half of the day would look and that was the last day we entered core short positions. 3C stayed in line with the downtrend until the pennant portion of a bear flag/pennant was formed, 3C went very positive there. This is why I suspected the bear flag was a trap. Sure enough the bear flag/pennant broke and 3C showed accumulation by smart money as retail shorted the market, the bottom was June 4th at the 3C positive divergence. Then I said, "Watch out at resistance, smart money will want to draw in shorts by making a test of resistance look like a failure"-a classic short set up), sure enough at the next negative divergence, there it was, the apparent failed test of resistance, price backed off and in to another positive divergence and here we are today. We have called every major move and reversal since May 1st (actually even before) and many, like what would happen as the bear flag/pennant formed, were called before the action even started.

The point of this chart is that the 60 min is in strong enough position to execute a short squeeze which is what we have been looking for since the lows of June 4th.


 Intraday this chart of the afternoon shows what I believe to be some short term distribution in to the price strength. This could also be distribution that is just taking profits off the table in front of an uncertain weekend. Either way, it's intraday, not a big deal.

 The 2 min chart of the IWM looks more like we see backing and filling Monday, but still, it's only an intraday chart, easily run over by the Euro gapping up above the June highs Sunday night.

 3 min IWM, shows a negative divergence, again this is along the lines of backing and filling on Monday, unless the Euro opens up and holds, then we are off to short squeeze land.

 The 5 min IWM is about as serious as the negative divergence gets, this is a timeframe that is a bridge between intraday and trends that move the market for a day or more.

 The 15 min shows the head fake in yellow at the June 4 lows with a serious positive divergence. Think about this, a perfectly formed bear flag/pennant breaks down, technical traders have price confirmation on what they know to be a continuation pattern (continuing down), as they sell short, they give smart money not only the supply needed to accumulate in size, but at better prices and they get to use the shorts as an ignition source in a bear trap. There are a few smaller divergences, but the overall trend of 3C is clear and it's higher than it was at the May 1 highs.

 IWM 60 min is plenty strong to do what we have expected.

 QQQ 2 min intraday, again suggesting some backing and filling Monday

 3 min at the EOD, it looks like the price strength was sold in to, but still very small beans.

 The 5 min-negative, not horrible, consistent with a consolidation/pullback.

 Look at the QQQ 15 min, look at the positive divergence yesterday and how much more accumulation there was at the same relative price level as the 14th. Also note the leading new high.

Finally the SPY 1 min, from a negative to actual small accumulation on the move above the former SPX closing highs.

All in all, I'm very happy wit where we are at. How many successful GLD puts did we have the last week? 3, 4? We set up a bunch of other trades and on our terms, we didn't chase anything. In the equities portfolio where the core shorts and the leveraged long hedges are, there are 6 core shorts, all in the green up to 22% in CAT, BIDU at +21%. There are 4 leveraged longs as hedges, 3 of 4 are in the green with TYH down 4% and TNA up 19%, that's 10 long and short positions with only 1 at a loss.

I think this market has been a meat grinder, but at the same time I think we have successfully navigated it. I have so many great emails every day of great trades that you all are putting on and best of all, many are your own, you applied the concepts, used the market updates and you made it happen, that's my goal.

I'll be posting some here and there over the weekend, but for now, ENJOY, You have done a great job the last 5 months in a really tough market!