Summary

To answer a bunch of emails in one post, lets go back to the very first sentence of Sunday night's Start of Trade for the new week

"As of late Friday, I expected a bit of a pullback from Friday's gap up, although we are above major resistance in the SPX and were above major resistance in the EUR/USD, both of which could create a short squeeze."


Thursday was VERY unusual activity as we saw an accumulation event, rather than the process, meaning there was strong accumulation very fast, from there the market gapped higher Friday.


What we are seeing right now is the start of the short squeeze we have been looking for for quite a while now.


Most of the action we are seeing has very little to do with underlying institutional trade and has more to do with the strongest emotion in the market, FEAR as shorts are panicking and the snow-ball effect is taking place.

 The IWM since breaking out of yesterday's triangle, that parabolic price action with no pullbacks is a short squeeze, it is probably nowhere near as powerful as it could be so the main institutional activity we want to be on the lookout for today is whether there is selling in to price strength or not, if there is then we may expect Friday to look a lot different than today thus far, but again, this actual squeeze has less to do with institutional money (although it seems by Thursday's action they knew something) and has more to do with the snowball effect of a short squeeze. This is what we have been expecting, the reason we bought longs for the sub-intermediate trend and as a hedge to core shorts and the reason I haven't closed a single long or short for that matter as I expect we'll see the re-emergence of the primary trend after the short squeeze.

What we want to know is where this is going Thursday and that's what I'm on the lookout for. I still don't intend on letting go of the longs bought as hedges as a short squeeze should be much more powerful than this when all is said and done, whether we get some interim trades and good set ups is what we are looking for now and that will depend on signals we get on the institutional side.

IWM since the breakout of the triangle yesterday.


I'll update you on any changes that will offer opportunities or suggest a change, but for now, retail is rolling over itself to cover as the snowball effect and fear take hold.