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Saturday, February 26, 2022

Weekly Wrap-up - 2/26/21 - The Short Squeeze Continues into Friday's Close

 I see a lot of traders on twitter shocked by last weeks rally, but this looks like the typical short squeeze in a bear market - just like the ones we saw during the 2007. This is especially true of "short squeeze Friday", which became a regular occurrence during that time. We saw several +1000 point rallies on the Dow, and this was back when a 1000 point rally on the DOW really meant something. Whereas today, 1000 point rally on the dow, is only around 3%...  to help put things in perspective.  

What would typically happen during the crash of '07 - "08, is we would see a 1000 point rally caused mostly by retail short covering, followed by a 3000 point crash. I'm much better prepared to trade that kind of market today, than I was back then, but it's still not going to be easy, by any stretch of the imagination, and for those who don't recognize a short squeeze when you see one, impossible.   

Let's look at some charts 

$INDU - the Dow - has only rallied back to resistance. I would add this chart to the public charts area, but I really have better things to do than try to keep 100's of charts up-to-date. 

To give you some idea of how I manage to correctly time markets constantly, I balance like 20 - 30 different charts, in each sector. That adds up to 100's of charts I watch on any given day. Hey, if this were easy everyone would do it!  

Dow chart #2. If the Dow continues to break out, the next level of resistance is our old friend 35.1 

Dow Chart #3 - shows the sideways - broadening triangle - pattern still intact, after last weeks little shakeout. That's the thing about these sideways expanding triangle patterns. They often overshoot the boundaries of the pattern.  Looks like the 200 day ma could easily be tested, and the same could be said for the $SPX. 

I even have a Dow chart priced in gold. This is an interesting view given the action that we just witnessed! 

I should mention that, I did switch out the broken 15 minute $SPX chart - in the public charts area - for a 30 minute chart, but a short term chart like this will only get you so far.  

If it were easy to time the market, and provide daily, or weekly updates, as well as up to the minute updates, in a trading room environment, I would do it, and charge $400 a head (monthly), but it's just too much for one person. 

I didn't have time to update the st $VIX chart on Friday, but I did that on Twitter 

We saw the $VIX target taken out, so I'd be a little cautious here, and I've already reduced my risk. I don't trust the News, the administration, or the charts - much - at this point, so it was a good time to take some profits. 

As I said on Friday, the charts have changed, and the short term trend is bearish.  

$NASDAQ - trend is down 

Another thing I mentioned on Twitter is that France is on death-watch, and given their history when it comes to world war II, you gotta wonder if history is going to repeat itself, and I believe if not for the ponzi global financial system, France would be trading like Spain. 

I perhaps sound too bearish in this update, but you're better off catching a short covering rally, than having your face ripped off by one. 

I think there's a good possibility that we'll see another shakeout, ahead of 1st quarter window dressing season, but I'm really not any more bearish than I was a month ago.  

Take care next week, 



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