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Last week [COLOR=#1e439a]we warned [/COLOR]of the possibility for a massive short squeeze melt up purely due to the fact that the most leveragable driver of the stock market, the EURUSD, had barely seen a change in net short positions despite recurring noises that Europe would somehow pull a magic money tree out of the hat and all should be well. Well, they pulled it, and the EURUSD soared over 300 pips.
There is one problem, however: as the latest CFTC Commitment of Traders update indicates, there was barely any change in net non-spec EUR bearish bets which remained stubbornly fixed near the 2011 highs, at -76,512 contracts, just off the prior week's -77,720. Granted the USD net long dropped yet again, from 41,751 to 32,110 contracts. But the one all important driver for yet another potential squeeze has hardly budged. The one saving grace: this data is as of October 25, just before the massive rip started. As such it is possible that a substantial portion of these shorts has covered. Alas, we won't know until next Friday. By then, weak hand bears, spooked by merely the possibility of another ramp, will likely continue to cover into any even modest dip. It won't be until this total short position moves materially higher that the chance of any material downtick in the market will reappear.
Heres my daily as of now . Got 100 and 200 sma here and thursdays high grazing 61.8% with an inside day friday . Next tuesdays a euro bank holiday and wed. has B.S. bernankes rate decision so should be interesting where we go from here .
*Edit - Almost forgot , NFP is friday so this might be a great week to stay on the sidelines or at least be extra cautious .
Monthly: We have overhead resistance from TL and fib at 4377
Hourly: PB stopped at important 61.8 (3964) retracement level. This level is key.
This would be a good place for a BPC to the upside.
A lot depends on what BOJ intends to do and what the EZB is thinking about.
News ahead and the G20 coming up. This looks like a volatile week. Just what a trader needs.
Broker: Advantage, Trading Technologies, OptionsCity, IQ Feed
Trading: CL, NG
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Nice sell off today from Friday's painful slow day. This last run up looks like a blow off that took price to the 61.8 level from the high of 4925 which was also a high volume area.
Going forward, we could chop around up here a bit but I still think there's significant downside potential but it will come down to the news.
