June 6 Similar Stimulus Short Squeeze Breakout Stock Scan

Jun 6, 2014: 12:51 PM CST

The breakout and impulsive bullish price action – continuing the large short-squeeze – extended into today’s session as bears become buyers and buyers add to existing positions or else plunge into the market since a clean retracement never occurred.

Just like yesterday, there’s not a key index level to watch or target when a market breaks this impulsively to all-time highs:

Folks, it’s more of the same and thus any attempt to make the situation complicated will result in losses or missed profits.

We’re seeing a one-sided bull/buy dominated market and that fact alone overrides everything else.  The situation is temporary – it will end – yet fighting it with your short-sale trades as long as it continues will reduce your account size unnecessarily.

We’ll be focusing our attention on the sideways compression currently occurring into the 1,948/1,950 area which could be an inflection point, but once again, a bullish breakthrough of this resistance ceiling is simply a fresh “get long” signal (as short-sellers buy-back to cover and buyers join into a breakout).

We’re seeing strong bullish money flow signals on an up-day from our Sector Rotation Chart:

Unlike yesterday (where Utilities topped the Sector Performance), we see another day of broad money flow but this time the relative strength takes place in the Offensive or “Risk-On” bullish sectors like Materials and Industrials (strong again today).

Our weakest sectors – finally – include the Risk-Off/Defensive Staples, Health Care, and Utilities (today’s worst performer with less than 50% of Utility stocks up on the session).

We ONLY have bullish pro-trend continuity stocks today – stay away from the short side of this market:

Conoco-Phillips (COP), Alliance Data Systems (ADS), Joy Global (JOY), and General Electric (GE).

A reminder – there are no downtrending short-sale candidates at the moment – don’t try to short this breakout market!

In lieu of short-sale candidates, take a moment to review prior posts in the archive regarding short-squeezes or “Popped Stops” breakout events (and how to trade them):

Playing Popped Stops from a Failed Retracement

Positive Feedback Loops in Price – SPX

Popped Stops and History Repeating (during January 2011)

Lessons from Failed Sell Signals and Popped Stops

Opportunities from Popped Stops Intraday

Quick Lesson from Intraday Creeper Trend Moves

A Lesson from Creeper Intraday Trend Moves with Divergences

July 11, 2011 “Making Sense of Current Range Behavior”

Textbook Triangle Trade Example in Crude Oil (tactics)

Higher Timeframes Lessons from the Breakout in Silver (Aug. 7, 2011)

Sep. 20, 2011 “SPX Breakout Trading Tips – Is this Really it?” (yes)

Lessons from Failed Sell Signals and Popped Stops

Opportunities from Popped Stops Intraday

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Corey Rosenbloom, CMT
Afraid to Trade.com

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