I wanted to do a quick update on the market condition and likely pattern unfolding.
As you know, last week I sent you the August issue of the INNER-Investor Newsletter, which clearly showed how the trend is now down and only short trades (inverse ETFs) should be traded for the time being. If you missed this special report or want to read it again you can read it here: http://www.algotrades.net/algotrades-inside-investor/
The past few weeks stock prices have been falling. As of today, it looks like the market is doing a short squeeze to shake out all the trades trying to profit from a falling market.
How do we know this? Well, technically we never really know for sure, but as of 11am ET this morning, the SP500 index popped to new short-term highs and the flood of buy orders upon this minor breakout are likely the traders who were short, covering their positions and getting back to flat in their account. The key here is that volume today have been VERY light. When a stock index breaks to new short-term highs on light volume, you have to expect the big guys are allowing it to run up.
The big guys (smart money/market manipulators/whatever you want to call them), was the market to rise here. Why? because it’s going to run all the shorts out of the market so they can unload shares of stocks they no longer want at a higher price, and they can also short the market to profit once the sellers step back into the market.
See the chart below for a visual of what is likely to unfold, and what the odds are pointing to as of this writing.
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