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Tuesday, April 5, 2022

Market Update 4/5/22 - the Rally in Emerging Markets - led by China - Continues

 It looked like money was going to be put to work, on the first Monday of the new quarter - in a normal fashion yesterday - but the big gains were limited to Emerging Markets, and tech.

I actually called out that trade last week: 

Today is a holiday in China, so that probably has something to do with the continuing short squeeze... 

The lame stream media spent the entire day point out that the tech sector lead yesterday's rally, but it was China, which led the rally, with the Golden Dragon Index up a whopping 7.37%.   

And this isn't the first time we're seen the short sellers squeezed out of the $PGJ

$PGJ - driven above the 50 day, ahead of a holiday - typical of a pump and dump market. I would expect this to hold above the 50 day for a few days, as this is looks like a weekly Options trade. 

Why would Chinese Stocks be up so much ahead of a holiday? Because if you're job is to put money to work, you are going to do that, before you go on vacation. Also the idiot retail short sellers, like to wait until the 11th hr to cover their short bets.   

$CZH China Index - snaps back to test the recent highs. Note this is an index, not a manipulated ETF, such as the Golden Dragon.  

I'm a big believer in trends, and patterns, so it's no surprise to me that the $EDC is trading at new recent highs. After all, I called the reversal in Chinese equities, and this is what a reversal looks like. Also looks like you're typical wave A pattern  

Now What? 

Since the current trend seems unsustainable, and since this was an engineered short squeeze, I would expect profit taking, over the next several weeks. 

$BABA - here's one that's worth watching. Watch for support around the $85 level. 

If you missed the Rally in Chinese Equities, and instead traded Gold miners, or some other junk, or even the $SPX, you've already missed the boat. 

It seems that the most highly volatile stocks are moving the market, and that doesn't bode well for the average investor. In fact if you invested in the $SPLV (Low Volatility $SPX), in order to try to avoid market volatility, that strategy certainly isn't winning. 

 $SPLV - Ends the day lower 

$NDAQ - even this was only up +0.24%, and you can see how it continues to struggle, above the top of the normal range. That's no doubt being held up as the powers that be build short positions.  

In fact I believe the entire market is being held up in order to build short positions, just as we witnessed Goldman Sachs doing ahead of the 07-08 crash.  

This explains why tops take so long to develop, as the powers that be spend as much as a year, quietly selling futures, as they continue to encourage unsuspecting investors to put their money to work!  

We also see the mass propaganda news working overtime in order to sell us a war, most of us do not want, and that means we're probably going to start WWIII in order to pass the blame for a market collapse on "War Criminal" Putin.  


Grammys 2022: Ukraine president delivers powerful speech bbc 

Since I mentioned Gold miners! 

The $GDX is a good example of everything that's wrong with this market. 

Miners reversed over 2 weeks ago, but now you see the 20 day moving average being bought. Take a look at a $GDX chart, for yourself!  It continues to trade at the top of the same range it's been trading in for nearly 2 years! 

$DUST (3X Miner Bear) To illustrate, how this market is trading 19 days later. No direction! Even a fuel costs soar, and Gold fails to break out, the miner trade seems to be dead in the water. 

I finally had to block a gold bug, because every day she would pump the gold miner trade, and even after China rallies some 40%, she continued to root for a dead sector. I suspect she works for a hedge fund, as she encourages retail traders to go long. 

I see a lot of that on Twitter; lots of fake accounts pushing dead trades. 

   Getting back to China for a minute. We know Jon Najarian helped engineer this short squeeze, and I know they (Najarian Brothers) watch the $FXI. 

$FXI - Watch the 50 day ma.  

Take Care, AA 

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