The Mother Of All Short Squeezes

Sell my shorts

Yet another extraordinary move higher leaving everyone thoroughly puzzled.  There must have been very few traders expecting a new All Time high after the breakdown earlier in the week.  It almost broke the high today!

I cannot even form an opinion as to where the trend is going.  But odds are certainly back with a new high next week.  I had been so convinced we were going to see one before the heavy selling came creating a new low in the S&P 500.  This is a very strange market.

My system doesn’t utilize shorting, but I imagine just about every man and his dog was short the market this week, so this is one heck of a short squeeze.  For those that are unfamiliar with the term.  There have been many traders clearly fueling this rally as they capitulate under the pressure from the bulls to buy buy buy and cover their short positions. (short positions only make money when the market goes down).  Short covering can actually boost the market higher.  You often see a sharp burst on a minute chart when a new high is broken as that is where all the buy stops are.  Just about all the buy stops where hunted and gobbled up today.

Where it goes next is anyone’s guess…I am clueless, and I don’t mind saying so. Cash is a position.

Market News:

U.S. stocks closed sharply higher on Friday as investors cheered a jobs report that showed economic growth but not enough, in the eyes of most, to warrant central bank tightening immediately.

Analysts called the April employment figures a “Goldilocks” report because it was just right for gains in stocks. The Dow Jones industrial average held morning gains of 250 points, briefly adding more than 275 points.

The major averages advanced towards records but failed to break them. After a volatile week of trading, the Dow and S&P 500 clung to mild gains for the week, while the Nasdaq was down 0.04 percent for the period.

April’s jobs report showed a creation of 223,000 jobs and an unemployment rate of 5.4 percent. Average hourly earnings increased 0.1 percent, a touch below expectations of 0.2 percent.

The Dow futures more than tripled from about 50 points to as much as 191 points on the jobs report, which was mostly in-line with expectations.

Analysts polled by Reuters expected the nonfarm payrolls report to show the creation of 224,000 jobs in April, with unemployment lower at 5.4 percent.

In other economic news, wholesale inventories up 0.1 percent in March, versus 0.3 percent gain estimates.

European equities gained, with the FTSE 100 jumping about 2 percent on a more decisive-than-expected U.K. election outcome.

One Response to “The Mother Of All Short Squeezes”

  1. Jeffrey M

    Lol, I love your honesty John, you’re right, what a crazy market!


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