Notice that during last week’s brief pullback, the NY Composite pulled right back to the 21-day EMA twice and held.
And, we closed at new highs for the move on Friday.
QQQ is still outperforming SPY:
If the short interest is as high as Tyler says it is, then if the EUR gets another huge squeeze, that is going to send all Risk Assets of every type, race, color, sex, and ethnic origin up on another big ramp.
Afterwards, the “Pattern Recognition” Algos will recognize this as one huge, giant, shakeout and everyone will have to switch from short to long.
Who knows how high we could go after that.
And it is no accident that something like this could happen immediately after:
1) Dire forecasts on the Eurozone week in, week out.
2) Maniacal panic selling every day for 38 days, evidenced by huge negative TICK readings
3) 2-year high 21-day Put/Call ratio
4) Every Riverboat Gambler trying to make a fortune buying VXX, TZA, FAZ, etc.
5) European and Asian stocks driven down so far, the dividend yield on EFA is now 4.3%!
6) The entire financial sector left for dead on fears of 2008 all over again.
7) Shipping, Solar, and Precious Metals sectors sitting at multi-year lows, also left for dead, with the GDX/GLD ratio sitting at 2011 lows.
8) Shanghai won’t go down forever, and the Chinese Plutocrats are likely to surprise the world with some unexpected measure. Why did copper completely reverse most of its losses the other day? After holding the low twice?
Anyone who has any doubt about how fast the market can come back, just pull up a recent chart of TRV and CB, and see what has happened to the insurance company stocks.
Oh, by the way, to all the “Robotroll” bashers, I will clarify my trading position:
I sold out all my stocks on the day the CRB index broke down on August 4th.
I bottom picked a basket of stocks the day after that 600 point down day, and I got shanked out of all of them at a loss when the SPY broke to new lows in October, thinking that we could retest the 2009 lows.
But after the v-bottom reversal on the Dexia news, I bought a bunch of stuff back and I’m still holding them, looking to add on further market strength if the market continues its gains.
Like 90% of the intermediate term traders, I was pretty much shanked out of many long term holds I had from 2009, and it happened at the exact worst possible time when I needed to raise cash anyway to pay my taxes on October 15.
But I’m quick on my feet and I re-entered a lot of positions shortly thereafter, and I’m ready for anything, up or down.
Oh, by the way, I rarely trade the mo-mo stocks on the IBD Top 50, unless they are S & P 500 stocks. I only comment on them to gauge overall market conditions.
Good luck trading for everyone, next week will tell a lot.