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Friday, May 27, 2022

Market Update 5/27/22 - Another Short Squeeze Friday, Natural Gas, and the Golden Mean

Another Short Squeeze Friday

Looks like the market is going to squeeze the shorts for the second Friday in a row, and as I reminded you in the last update - Dated May 25th - never trust the traders on CNBC, and "never sell a dull market".  

To be honest I only have a few traders following me on my private twitter account @3XTradersLive, and unless things pick up substantially over the next few weeks, I'll no longer be accepting new paying members. I may decide to leave it open, and not require payment up front, or maybe only require $2, in order to weed out the bots, and the trolls, but unless I can draw a crowd like I did in the early days...; It's just not worth the added stress in my life.

I did call the bottom, and we've enjoyed the biggest rally we've seen in nearly 2 months, and that's not even counting today's continued short squeeze.... More on that, when we get to the golden mean...   

Natural Gas 

1. Anyone who's been following me on my regular twitter @3Xtraders, knows I've been covering Natural Gas, and the energy trade very closely over the past several weeks, so when #NatGas dropped back below $9 on Thursday 5/26/22 - just ahead of Contract Expiration I noticed it! In fact I charted that top in real time! 

2. Of course this only like the 12th time I've tried to find the top in NatGas, and I'm still not sure this is "the top", or just a (short term) top. I think that depends on whether we see a mad rush for the exits ahead of the long holiday. 

I'm sure you've heard the saying, "sell in May, and go away", and that saying seems to apply to the bloated energy sector. Will the powers that be take profits, ahead of the summer break?  

3. I also recognized where Natural Gas bounced, because I immediately knew where to look!  

The Golden Mean 

What is this, golden mean, you ask? It's simply a term for the 61.8% Fibonacci (pullback) retracement, target, and if you still don't know what I've talking about, you have some home work to do over the holiday. 




I've seen the Jackasses on CNBC's Fast Money giggle like school girls when mentioning Fibonacci ratios, but only a jackass would poo-poo something that works on a consistent basis, and something that's been programmed into the Algorithms that control basically every aspect of every market.

Is it any wonder that Jon Najarian was dead wrong about this weeks trade? He didn't know where to look! He's so hyper-focused on the $VIX, and hoping his options will pay, that he totally missed the forest through the trees, and now the boat has sailed without him!

Think back to last Oct., when these fast money clowns tried to convince us that October is a volatile month. I remember it well, because I poo-poo'd that nonsence at the time. 

Looking at a monthly view of the $VIX any fool can see that October isn't any more volatile than any other month. Either Fast Money was mistaken. 2. They were bearish, and spinning a bearish narrative. 3. They were really bullish, and trying to throw retail investors off.? 
 




I think one thing is for sure, these influencers helped drive negative market sentiment, and that may have helped drive the $VIX higher than it would have gone normally.   

One last thing: Today's short squeeze is obviously going to be in heavily shorted tech stocks, as we see the opening bid on the NASDAQ raised above the 20 day moving average. 

Of course that is going to trigger buy signals... and the short sellers should remain trapped into the long weekend, and the rest is history!  

I'd expect volatility and volume to remain super low through next week, so I wouldn't be expecting much as far as market direction. 

June is a window dressing month, but I would expect the short sellers to return from vacation - on June 6th - and try to trash the market one more time, before they go on break again, heading into July. 

Have a great Memorial Day Weekend! 
AA 


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