A Double Double Bluff ......................

So Buy the Dip worked again ... My inbox packed out this weekend with emails explaining that stocks wont crash this time because everyone is looking for it ... I Disagree ... I fear we may now be in a classic game of double bluff, with mkt sages (Mostly bears for years) now calling the clever card saying we don't get a major correction because its way too telegraphed ... of course, the problem is that they themselves are the double bluff and in fact just add fire to the bear story ... i agree ... corrections don't come when people are expecting them .

 Regular readers will know my love of the IG index customer sentiment readings (For the uninitiated IG index is a financial bookmaker and they publish near real time customer sentiment numbers reflecting as a percentage of their customer base how people are positioned in their contracts) At first glance these offer little insight but if you know where they've come from on a 6 month basis they offer a crucial insight into "Man on the Street" positioning ... positioning which is very fadeable !!

Lets look at their Wall St contract (Dow Jones industrial average) .. Over the last 2 years this has historically traded short ... its been as high as 90/91 % short (Mid Aug Highs) as i write we sit at 63 % Short ...

At no point in the last 2 years has this sat less than 70% short for an extended period and im reading this as the perfect example of Dip buying , bears turned bulls ... The DJIA is still very much our leader lets look at the chart quickly ....

We are hovering above this very important level (18050/18100) .. A marginal new high today looks horrible with a total lack of follow through ... As i began writing this update we started a pretty sharp sell off which as  has stalled at 18155/65 for the moment .... the real key here the close ... if this pushes lower again today/ tomorrow it sets up Horribly and remember we don't have the huge short base to buy the dip this time ... 

Untill next time .... 

As always twitter updates @contrarycalls

Well .... that escalated quickly !!!

Morning all , this time last week i wrote about the risk to equities and in particular the frothy old FTSE 100 !

Last week was a shocker for global eq's and the FTSE indeed lagged pretty badly ... the $6bln question now though was this a head fake or is this just the beginning ...

No doubt the summer has/had bored out many if not all but the most stubborn of bears ... the BTD (Buy the Dip) gang have had it all their own way now for nearly a year now with no major (Over a week) follow through to the downside ... in short the dip buyers haven't felt any pain for long enough and with a thoroughly deluded short base all buying the dip now as well now i think we may be in serious trouble into year end !

Lets look quickly at the charts ..

Our favourite and our short position ... here in weekly form ... If anything this chart highlights just how much downside risk their really is ... The key here is the cluster of averages around 6500 .... a close through this level opens up my initial target of 5700 and maybe a lot more downside .... 

The Nasdaq 100 ...

Home of the tech giants , home of the froth , home of the hot money ... The most violent performer last Fri and will set the tone again this week ... The broken down trend line (A) is the key 4460/4450 this week ... A sharp down move may stall here for a bit but if this gives way on a closing basis i'm looking at sub 4k by year end ....

Lastly the king , the leader , the Dow ..

Of all the charts of all the major indices this is the most worrying ... Much column space was devoted in the past few weeks about Dow theory (Confirmation of Index highs by other related indices) and its usefulness or lack thereof in current times but strict students of the theory will be the first to tell you the recent industrials (DJIA) high was not confirmed by the Transports (DJT) and this was critical ... That aside the DJIA has broken back into the channel that has held it steady for over 2 years now and looks extremely vulnerable to more selling pressure ... 

In summary a very critical day today , especially for US stocks ... we'll see bounces i'm sure of that , the market has made too much money buying dips for it not to attract buyers but it really feels like we are going to test the nerve of these buyers ... a DJIA close below 18050 opens up a lot of downside ... sentiment is still very blase and that's the single most worrying thing to me ... I remain short my FTSE .. depending on closes and levels this week i intend to add shorts across all major indices and with vol (Albeit higher in the last 2 days) at very very low levels some Oct expiry way out the money downside looks a great investment ... 

Until next time ....

Please follow my twitter feed @contrarycalls for more updates .

....... Sell again after Labo(u)r Day .............

So , finally back from a summer of travel ...what did i miss ??

Its been almost 2 months since i last posted .. If you remember i left with a short GBP/USD position a little higher than where we currently stand with a stop above the notable descending weekly / daily down trend broken after the brexit vote . Well guess what ? Having spent the last 7 weeks bumping around in a pretty tight range we now find ourselves back against these massive levels see daily and weekly charts below

Clearly a very key time for this cross .... i remain short but will be very quick to cover and reverse long on a clean break of 1.3426 .

The post Brexit stock move has been far more interesting ... An initial slump followed by what can only be described as a major squeeze ... Volume over the summer disintegrated (At least 2 days in Aug the benchmark $SPY etf traded less rhan christmas eve 2015) and the market ground out new highs in most major US indices in what looked a very painful manner ..... bears, as always very keen to jump on any downside , lows made first 2 hours of US trade , squeeze into close , repeat, seems to sum the summer up but now with Labo(u)r day behind us we have the chance for the real move and i wonder if it will be the move we were all looking for in late June ??

See long term FTSE 100 chart below ...

I See the squeeze , i see the classic pain rally but look if this was an index going places we would have cleared and held above the series of old highs by now (6958 High December 1999 , yes 1999 !!) . I hear the index has changed, i hear the weak pound benefiting multinationals i hear all that but good old price action is saying to me that perhaps we get our Brexit selloff into year end .....Technically stacks of resistance here.... im selling here (6890) , ill add at 7000 with a stop at 7150 ,, if im right and this plays out i'm looking for a retest of the post brexit low around 5700 ... and which point we ll re consider ...

Until next time .....