Get Ready For The Whipsaw And Squeeze

I’m not trading this morning as I’m running last minute tests before deploying the EC filter version of CrazyIvan. However as we are at a critical stage on the equities side I wanted to post an update really quick so that you guys are sufficiently prepared for what’s about to transpire here. Let me paint the picture:

The worst thing that could happen here right now is that the tap just takes off as it has the lowest probability and it would result in an incredible squeeze leaving most market participants behind. But if you look at the daily spoos you will see six consecutive higher highs. Yes, we have counted more than that in the past but given yesteday’s NLBL breach at 1867.5 and the fact that we are in earshot of the all time highs its reasonable to expect some kind of monkey business here before the tape finally picks a direction after two months of driving everyone nuts.

It’s quite possible that we see a fast drop lower back toward the NLBL or perhaps near 1850 and that 25-day SMA. From there it would be an ideal spot to pick entries for a push higher resulting in a squeeze.

There are subtle signs out there suggesting this may be in the works – here’s the GPB/JPY correlation which detached earlier this morning. Again, may be nothing – perhaps it’s a fake out and we really proceed higher but if we do it’ll happen very soon.

Bottom Line: IF you grabbed that NLBL entry higher yesterday then simply tighten your stop to b/e or a bit above. If we run higher you ought to be okay but if we drop today then I expect better opportunities after they’re done scaring the children and luring in the intrepid hobby bears. Talking of whom – they’re in pretty shabby shape right now but if by some miracle we drop back below the 100-day SMA then the entire situation changes. Not worth pondering on this right now but if you are grabbing longs on a drop lower put your stop below the 100-day as that is the bull’s current Maginot line.

Alright, I see you tonight near the close.

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