The skepticism that colored my previous tout proved warranted when the futures took a sharp dive Wednesday after head-faking above some prior peaks around mid-day. The rally trapped bulls and bears alike, causing the former to get stoked with short-lived enthusiasm and the latter to panic with a frenetic burst of short-covering. What ensued when the frenzy cooled was a 46-point reversal, equivalent to a 350-point plunge in the Dow. What will the Smart Guys, aka DaBoyz, do now? The futures were up nearly 15 points in after-hours trading, goosed by a fresh binge of short-covering on the usual, extremely low volume. Surprise surprise. It smacks of distribution, of course, but that won’t be much comfort to shorts who are presently caught in the ringer. When the pressure relents, presumably overnight or early in Thursday’s session, my gut feeling is that the broad averages will come down hard. Although we shouldn’t get our hopes too high, if stocks are trading in merely moderately positive territory at the opening bell, look out below! Alternatively, in the unlikely event shares push higher, use 1923.25 as a target. It can be found on the 30-minute chart, where a=1851.25 on 1/26, at 5:00 a.m. ________ UPDATE (3:21 a.m. EST): The nasty, volume-less short squeeze underway at the moment, in the dead of night, projects to exactly 1899.50.
