Short Squeeze Here Maybeby Danny on July 1st, 2008 at 3:23:03 pm |
Looks like the short squeeze is here…sort of. I wouldn’t get too worried.
In telechart, I run an oversold scan and yesterday there was the highest number of stocks on the list ever. At least from what I can recall. Usually there are a couple hundred on the list and yesterday there was a +1,000.
I translated it to blocks, and it looks the same, but finds fewer stocks. Here’s the picture. It works pretty well.
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Also, on the iBC Machine, when a certain ratio gets to .9 or greater, it is time to cover and buy. It’s was at .86 yesterday and .84 the day before. So that’s pretty close.
Those readings combined with today’s reversal makes me think we’ll go higher, the pertinent question being “How much higher?”
Maybe a couple hundred points. Tops. Only shorts covering are pushing the market higher.
There’s not much in the way of a catalyst to project markets higher. We may get a singular event — some report–but it won’t likely portend any meaningful change in the fundamentals of the market.
if oil drops significantly or the NFP report on friday is surprisingly good, a short squeeze will follow. other than that, i dont see anything either
July 1st, 2008 at 3:52:35 pmyeah. it looks like any bounce will be fleeting. After all, stocks are for asshats.
July 1st, 2008 at 4:08:05 pmRemember the EU raising rates Thursday, which will likely crush the dollar again, which will likely spike oil back up, even if it sells off tomorrow. I am anticipating a one-day bounce but will be looking to get short perhaps at the end of the day tomorrow.
If EU doesn’t raise rates, then maybe we rally longer, but I can’t see that being good news as well - look at how our markets responded when the Fed chickened out here.
July 1st, 2008 at 4:22:55 pmanyone want to bet that the ECB doesn’t raise rates on thursday? i think we may be setting up for that to happen.
sarkozy’s tough anti-hike talk today may have added some fuel to the GM nonsense.
may not be the case, but it’s worth watching, because a pop in the dollar will cause the energy trade to fall off and traders will head straight for the banks, tech, and retail again. i’m talking about a short-term trade, though. over the course of the year, i still think the market drifts downward.
i’m not 100% convinced this is how it’s going to play out, but i wouldn’t be surprised.
July 1st, 2008 at 4:30:36 pmToo many think that higher rates from the ECB are a given …. it’s already priced in and should the squeeze on Trichet force him to stand still expect a hugh rally ….
http://www.iht.com/articles/2008/07/01/business/01ecb.php
July 1st, 2008 at 5:01:56 pmthat’s my line of thinking, emp8.
sarkozy is much more pro-american than chirac was.
if israel quiets down with the iran nonsense, and ECB leaves rates unchanged, we could get another bear market rally.
if not, it’s back to the slip ‘n slide.
July 1st, 2008 at 5:19:34 pmI think Trichet is getting pressure from around the globe to hold rates in order to help the dollar and hence lower food/energy costs …. long DDM with a stop of course.
See my post from Elliott Wave Lives On here:
http://www.ibankcoin.com/alphablog/index.php/2008/07/01/afternoon-delights/
I’m a bear for sure and will load up on shorts after this rally for the final leg down to new lows.
July 1st, 2008 at 5:25:54 pmI agree to a certain extent that most people are expecting the hike, so therefore it is possible it could be priced in. I am just thinking ahead to what will cause a reversal of this possible rally, and I am thinking that could be it.
July 1st, 2008 at 6:07:55 pmemp8, i agree completely.
mac, i was trying to think of things that could stall any bounce as well, so i understand your thinking about rates.
July 1st, 2008 at 7:46:35 pmWhat if Trichet lowered rates? Wouldn’t that solve the inflation problem by strengthening the dollar, thereby pushing down oil and comodities?
July 2nd, 2008 at 4:43:52 am