My Vision Differs From Yours

It has been an epic squeeze-fest this week, with the badly beaten-down small caps getting plenty of action to the upside. 

As unpopular as it may feel and be, part of my job description is often relaying objecting analysis in the face of overwhelming emotions of any given moment in the market. What that means is many folks will have a love/hate relationship with me, almost by definition. One moment they will sing my praises and pour on the love, the next they will abhor my entire existence--It simply comes with the territory. I have the temperament for it, so I understand markets like these will magnify that dynamic all the more. 

Thus, when we examine the updates S&P 500 Index daily chart, below, clearly the 200-day moving average failed miserably to act as resistance earlier in the week, In fact, just about everything did and still is failing to stop the squeeze. 

For me, if bulls break and hold above 4400 for a few days, especially on a weekly closing basis, then I may very well change my tune into the holidays and back off some bearish bets I have been long-term swinging. 

But that has not happened yet. And as you can see the horizontal light blue line, the sheer amount of newfound bullishness in the tape coincides with price lurching back up to this key area dating back to early-June. 

Above there, especially if we hold above for a few days, would indeed be eye-opening for me.

However, recall that these exuberant, fast and furious emotional rallies are actual part and parcel of a bearish tape, especially when rates are normalizes in a non-QE world. They are not the exception, but rather they are the rule--The issue is where, precisely, they meet a screeching halt.