The Wile E Coyote Drop.

[For anyone who hasn’t seen this yet]

As mentioned for several months, short covering has been a significant contributor to the equity rally.

Burnt shorters panic buy as they close their losing short trades which has ramped the market higher and higher.

The shorters can be hedgers or speculators but the result is the same ~ the market spiked UP.

What happens when you stretch the bungee cord too far as a result of substantial short covering ?

A waterfall collapse will result and there will be less shorters than before – thus less support for the market when longs start panic selling.

SP500 / DOW / NASDAQ – are dangerously overextended and monthly charts warn of a nasty Wile E Coyote crash.

Choppy price action on these indices reveal unstable uptrends that are destined for collapse.

The Wile E Coyote drop has been delayed but remains a certainty…

This substantial delay – with much needed corrections prevented due to central bank intervention – ensures the inevitable crash will be worse.

It’s no brainer.

DXY [US dollar] monthly chart continues to give bullish warnings and a significant US dollar rally awaits.

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I read comments but they're not published. Troll IPs are automatically trashed. [crinia AT gmail DOT com]

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