Repellent Relief

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I trust everyone reading Slope – – both humans and algos alike – – took full advantage of the very powerful “sell” signal I discretely issued before all holy hell broke loose:

It’s true. My spirit was so wasted away by the day after day assault against shorts (particularly small caps) that I just threw my arms up. I still had positions, sure, but at a mere 95% commitment level, if definitely was cautious (and had dipped, at some times, to almost 70%). Suffice it to say that it was a terribly welcome change to the day. It feels like about a month since there’s been any selling at all.

The small caps have been rather maddening lately. Here we see they were banging on the support shelf, over and over. Finally, glory be, it broke down. What happened next? A powerful, almost ceaseless, reversal, exploding past recent highs! Both of these were “overshoots“, screwing over bears (in the first case) and bulls (in the second). Once the stimulus talks were called off, about 30% of this recent, nasty rip higher vanished in no time.

The selling late today also created a saved-by-the-bell moment on the ES. A successful push above the red horizontal would have completed a very well-formed, and large, inverted H&S pattern. It got right up to the edge of the line, and, bang, one tweet is all it took to send it sailing. We are not out of the woods yet. This pattern is still absolutely capable of completion, which would be the end of the bears for weeks, if not months, to come.

One market that actually has been behaving itself quite well, and relatively predictably, has been gold (and silver too, by the way). Indeed, on Tuesday morning, I did a post about the Precious Metals U-Turn, and a couple of hours later, they got absolutely creamed. Gold could easily get to $1800, and maybe even $1700.

For myself, one quick selloff isn’t enough to restore my confidence or, God forbid, bravado. I inched my positions up a little – – 40 of them now, with about a 103% commitment level – – and they are all, for the moment, in the green. But this market remains – – well – – here’s how I put it:

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