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After three days of the market attempting to break out but getting stopped when the VIX hits its lower channel line and its 20 EMA (exponential moving average), they finally said enough with trying to trade the market up and instead went with Plan B the market gap and squeeze as I mentioned they might on Friday. This took the VIX well out of its uphill channel and brought some money back into the market today.
While the NASDAQ is already attempting to break out of its 3 week channel (thin pink line) all eyes will be on the DOW and S&P when they hit their upper pink line channel shown on the death cross charts on the right sides. One might get the feeling that Bernanke might be trying to sell us on the idea that the DOW just barely did a death cross so let's pretend it didn't. Either way, the shorts are getting squeezed hard and as long as the market doesn't have a meaningful pullback more and more shorts will buy in to cover, throwing more kindling on a short squeeze fire.
Also, the VIX has to deal with the 29.80 level as shown by the lower line of its declining red channel. If it breaks down through that red channel then the shorts will know the cat is out for sure and this market could have a sustained run.
Alan
Alan
