Thursday’s trade was a “crash” UP — and there are no circuit breakers to protect the “shorts”. It appears that the CPI and Jobless Claims data was better than expected as evidenced by the first minute of trade after the data release with the ES producing a 132-point range with the NQ throwing up a 508-point range — and yes that was all in 60 seconds!! But wait it gets better — the YM jumped the shark coming in with a 996-point range in 60 seconds. How short was the market? How short were options traders?
I have updated the labeling and the Fibonacci retracements and extensions. I still feel that we are still in an Intermediate wave 2 countertrend rally and have discussed the levels now being reached several weeks back when I first presented the Intermediate wave 2 expectations. The NQ being the “weakest link” couldn’t produce enough energy to get over the hump to the finish line or saw I thought. In any case the pressure cooker of shorts exploded this morning — and brought the larger wave 2 into clarity. Again, I’ve adjusted the labeling for the Minor A and B waves which are complete leaving today’s rally as all or most of minute wave 3 of Minor C. So, what was labeled as the start of Intermediate wave 3 down are now delayed, while Intermediate wave 2 finishes.
I also include plenty of commentary on options trading and expirations and the gyrations caused by “gamma” squeezes and other factors.