DaBoyz revealed a hint of weakness yesterday when the short squeeze du jour peaked without exceeding a key high at 1992.75 recorded on August 27. That was the apex of the bounce from the bombed-out lows of Black Monday, but it is also the point ‘C’ high of a bearish pattern pointing much lower. If DaBoyz could have surpassed that high, they would have. They may yet succeed, but it should have embarrassed them that they couldn’t do it on the first try. Bears will breathe a sigh of relief, but if they breathe it too deeply or for too long they are going to get trapped again. My hunch, though, is that the failed rally will add weight to selling in the days ahead — and at night, since, as we know, when DaBoyz get desperate, they go for broke in the wee hours, when supply is thin and any sort of news is easily amped. I’ve included a chart that emphasizes the bearish big picture. It implies that the next swoon will bottom near 1861.50 — equivalent to a 700-pooint fall in the Dow. A ‘mechanical’ short may be possible once the green line has been decisively breached again, but I’d suggest sticking with ‘camouflage’ entries and smaller patterns. Stay tuned to the chat room for guidance in real time.
