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Wednesday, June 15, 2022

Market Update 6/15/22 - Capitulation - Part 1

 Yesterday was crazy! I started this blog on Tuesday and never was able to finish it... 

First off: NatGas finally pukes! 

I kinda knew more bad news was coming, and not because I have any insider information, but because I figured the damage at the Freeport facility was probably much worse than first reported, and that the timeline to restore LNG shipments was going to be revised, and that prediction made me a hell of a lot of money, yesterday! 

I recommended #NatGas, as a buy after yesterday's capitulation, but I'm not actually long myself.   

Speaking of "capitulation" 

1. If you don't know what capitulation is, you probably shouldn't be trading anything with real money, because capitulation points are where you typically find market tops, and market bottoms.  

Here's a short sweet explanation of what capitulation looks like:

2. Without revealing all of my secrets to recognizing capitulation points, and because it would take several thousand words to even scratch the surface...  I can tell you that experienced traders look for volume, to confirm the shaking out of the weak hands. I touched on this in a recent update, after Jon Najarian said he was "looking for volume...." 

You'll also hear experienced traders talk about the final "whoosh", aka shakeout. This is capitulation, and you'll see the same thing at a market tops, where most the bears finally give up. This is the whole reason the bulls drive worthless stocks, and entire markets, to new highs, only to turn around and sell them to zero, as they did, the oil futures market, just a couple of years ago. Today, you hear these criminals claim that the Energy sector has the most value, and if you believe that nonsense, I have a bridge in Chicago to sell you!    

Capitulation seems to be the most overused word on Twitter lately, and it seems the #FinTwit community has run with the Bloomberg narrative, because I saw the same thing being reported there, yesterday. Of course I had the sound off, as usual, but that's what I saw them chattering about, yesterday morning. 

As far as capitulation points go, this one was pretty darn weak, although I did call it "pretty convincing", on Friday 

   Once again, I'm way ahead of the Wall Street narrative, and that's why you see me winning. 

3. Capitulation points should be marked by breadth, and the fact that we saw such a dramatic bearish reversal in energy stocks helped...  

As I said, last week, "you can't have one sector continue to make higher highs, while the rest of the market continues to make lower lows". And now you see the re-balancing, and probably a sector rotation, out of energy, and back into tech, because this is one of the only places, where we've seen real capitulation. Technology!  

I'll attempt to prove that in tomorrow's update, and I only say attempt, because I'm still having some serious computer problems. That makes 2 catastrophic crashes in a week!   

This blog has already run too long, but find out where else we've seen capitulation in Part 2 of this update.

Take Care, AA 

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