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Thursday, November 4, 2021

Market Update 11/4/21- Got Our Relief Rally! Everything Has Gone According To Plan

Over the past few weeks, and even yesterday; everything has gone according to plan 

I suppose the $COMPQ (NASDAQ) could take out the 16k level, and the market could even hold up into the end of the year, but certain sectors can start leading the way down, in what I expect will look like the biggest pullback we've seen in over a year - since the covid rally began - since March Options Expiration, 2020. If the correction took until March 2022, to complete, that would really surprise me. I think it's way more likely that the powers that be will take down the market ahead of the Thanksgiving holiday, before squeezing the retail short sellers, going into the end of the year.

Speaking of holidays, we have Veterans Day coming up fast, There is trading on that Friday, but volume, and volatility will be light, and that makes for prime market manipulation! I'd expect to see some more crazy short squeezes like the ones we've recently seen in names like Avis, and $BBBY, and others.   

Getting back to the coming correction 

Of course this means the $VIX needs to get back above 20, and after yesterday's somewhat dovish fed announcement the $VIX closed just above our 14.84 target (see yesterday's blog...). 

We did see a little washout to a lower low on the $VIXY, as expected 

$SPX - 15 min. chart: 

I put a little parallel channel on this chart this morning, and 4600 is the bulls st stop. 

We also saw a little breakout on the $WLSH 

$QQQ - we saw the QQQ's trade to the top of the range, but could see a false breakout looking at NASDAQ futures this morning. If that happens the upper channel line, become the stop hunt

And That covers the first 5 charts in the public charts area. You can see how much work it is, just to cover a couple indices, and the $VIX, and provide simple explanations, and that's why all the other short term charts are coming down. Not sure how long the remaining charts will remain, but probably until they break. 

I've updated this $SPX chart to reflect what is obviously no a powerful wave "iii". The market is just too weak to confirm a powerful impulse wave. 

I think it's way more likely another head-fake wave c of B, and that's why I'm expecting a bit of a mini-crash. I'm not going to reveal targets, because I don't want to help the hedge funds, or anyone else who isn't paying me.... for that matter.

And if you look at this rally on the DOW, it's simply a retest of the highs... 

On the next pullback, we'll be watching the 50 week moving average around the 34000 area btw 

So, where will this so called mini-crash begin? 

Risk off usually begins with the small-caps, because small-cap companies carry the most debt., and if Wall Street believes interest rates are going to rise, then selling small caps makes sense. And driving small-caps into a bit of a bubble, before you short the hell of the sector makes even more sense, and that would explain the $Russell 2000's recent rally to new all time highs! 

The only problem is that Stock Charts no longer provides the $RUT chart. All we're left with is the corresponding ETF chart. What's funny, is I can chart the $RUT $VIX

What I do have is a micocap ETF, ticker symbol $IWC and it's trading in a similar way to the DOW, of all things. 

$IWC (micro-caps) Continues to trade in a tight range, as it holds above the top of the channel. Looks like bearish accumulation to me. 

I'll add that long term chart to the public charts, just for fun, and so you know where the sector is going to crash.

$IWM - The Russell 2000 ETF - broke out of the bull flag pattern, I alerted to months ago. 

Getting back to the DryShips chart, I was pointing to yesterday. 

What does the crash in DryShips mean, and is it a leading indicator, for anything? 

$BDI (Baltic Dry Index) - AKA DRYS - isn't really an index at all. It's a formerly Greek shipping company, that was bought out in 2019 -  

DryShips' stock soars after buyout deal at 37% premium marketwatch

It does measure the price of things being shipped, and after the boom we've recently witnessed at the shipping ports, a subsequent bust makes perfect sense. So basically orders surged - in part because people believed there were going to be shortages - and now orders are plummeting. Boom - Bust. 

So I believe it is an indicator, and an indicator for lower prices, and especially for commodities!  

And that means, no interest rate highs, and possibly no taper, due to the inflation story dying a sudden death. Hyper-inflation is a different story, and the $USD looks pretty dreadful, but maybe other currencies crash harder. Maybe we see a continued race to the bottom? Race To The Bottom investopedia Also see: Currency Wars The Race To The Bottom Has Begun financialsense,com  

I suppose there's always the possibility that lower commodity prices, will help producers, and consumer's pocket books, and that includes China, but that remains to be seen.  

Good Luck, AA 

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