Happy Weekend, traders.
The market has endured a tremendous and unrelenting short squeeze all week from start to finish.
If we examine the S&P 500 as a contracting structure, it now looks like this:
It has taken on the appearance of a falling, bullish wedge, complete with a “textbook” underthrow at the bottom and a breakout up here at the top. And if the breakout can be maintained, I will remain open to a bullish eventual outcome. But before it can do that, it needs to at least make a close above a prior high, and it needs to make a higher low and then go on to make higher highs. That’s a tall order given the amount of energy that was no doubt expended to get us up here in such short time.
So, we’ll keep an eye on that structure and see what she does.
But, that’s not the only way we can capture this price action, and the alternative paints a very different picture.
Ok, so: bulls give me some higher highs and higher lows, we good. We see weakness, and that’s the plan!
The VIX has a good base, a large inverse head and shoulders can be seen:
The 10-year yield, despite its monstrous drop, held its red trend line and may be forming a large bullish wedge:
And I still have an unmet higher target on that.
The bulls have to do more that exhaust themselves in a single squeeze. A slower, more patient accumulation at the lows and I think they could get a rally that sticks. That would make me think there were institutions down there. This, I don’t think can stick.
I hope everyone has a fine weekend.