Time for a new technical pattern. It’s called the ‘V cup’. Originally popularized by Madonna in the ’90s it has taken over the trading world by storm in 2014.
Below is a 15 min chart covering just 2 weeks, but the message is clear: Nothing sticks. Every single amount of selling is immediately saved and ramped up. It doesn’t matter what is going on in the world. Ukraine who cares. BAC earnings? Doesn’t matter. 1% GDP growth? Let’s buy. Obliteration in small caps and tech? BTFD. Missed economic reports? Gimme something to buy. You get the picture. Is it any wonder then that demand for protection is virtually none? At record margin debt traders and investors alike have learned not to worry. Ever. About anything. And if you short (like I did last week), you better know when not to extend your welcome.
And so clients saw me closing shorts systematically yesterday. The V was coming and it was no surprise. The question was only when and how which we fortunately had covered in yesterday’s trade plan. Bottom line: In this market you need process and a very open mind to trade the constant up and downs: