Talk about a How's
If Austin Powers had only changed the line to be, "just before Thanksgiving I live to give myself a how's your father" he would have described this perfectly. I have mentioned recently the heavy commercial selling that was in the NAZ futures in particular as being something that was also evident at the 2007 top. This is the Naz 100 futures chart above and you can see that it is crashing during the electronic session on this holiday.
There is of course a news story out about concerns about Dubai debt repayments, so it is possible that was the catalyst for this. However, I have been harping for quite awhile that this market is on fumes bigger picture. Due to the market manipulation by the US Government, it is has been very difficult if not impossible to make money on the short side. I have done it a few times, but really been lucky, maybe a tad of skill.
Certainly a move like this is going to catch the world by surprise. I did notice last night in what would normally be a dead night session that the Aussie dollar and other currencies were getting clobberred. Since the Aussie was my trade for Friday, I put some orders in to short just in case it continued to trade down. These orders were filled. I am also looking at Long the Dollar Index following Friday's post about the trap that is setup. We have not traded through Fridays high there yet.
Above is the Aussie short entry I took. You can see we had a pretty good head and shoulders type of pattern here, and the momentum oscillators were diverging a ton here. Also the Large Trader Proxy index, which is designed by Larry Williams to mimick what the Large Traders are doing has crossed down now to the sell zone. This accompanied by having record short positions with commercials in this market, and we had really as a good a setup as there can be for a short entry. I will take every one of these regardless of what else is going on. I cannot remember this particular session ever moving like this. This situation we have here is very unique.
The PPT is not going to like this one bit. How ironic that is, a situation that will strengthen our currency, and our own government will undoubtedly try and stop it. Go figure!
In any event, Fridays market action even though it will be a shortened session, is going to be very interesting. The world may have just been pantzed. With the dollar soaring here there is one thing that all the amateur economists should take note of. If you expect a stock decline, you should not be long commodities. A huge dollar rally is going to happen when the stock market declines, which is going to decimate commodities. What you are seeing here may be the beginning of something very big, although we cannot ever know that at the time. Short positions are the way to go here for now. I am of the opinion that this huge move up is an air pocket with no support at all underneath. We are about to find out if that is true or not. This breaks the short term trend, but not the long term one yet.
That post on Friday about the dollar sure looks timely right now. Tomorrow should be fascinating to see if the PPT can stop this.