How to Fleece Retail Investors 101: The Great ZigZag
Updated
The Great Fleecing of novices and fools continues.
First, a massive year-long rally was permitted to run its course all through 2021, price climbed inexorably higher and higher to astronomic regions. Euphoria was universal. Stonks only go up! No time for Puts! gOgOgO!!
Bulls made money.
Second, came the Wyckoff distribution we have seen all year long in 2022, right to the last trading session; Santa didn't come.
Bears made money.
Now, come Phase 3. All retail is bearish; no one expects price to rise; therefore it will. All your poots will melt and shorts dwindle, bear shares will be destroyed when price rises and time decay eats them away as a mighty bear flag unfurls. Retail investors will perk up and load more stonks because;
A Golden Cross is forming; "The Bull Market is Back! Yay!"
VIX will get crushed, and Bears will lose all or most of their money.
Then comes the bitter surprise... a Zig-Zag correction of monster proportions with a double bottom.
Bulls will lose all or most of their money and bears will be out of cash from their massive losses on the bear flag unfurling.
By EOY 2023, no one will have any money left.
Then the cycle begins anew!
First, a massive year-long rally was permitted to run its course all through 2021, price climbed inexorably higher and higher to astronomic regions. Euphoria was universal. Stonks only go up! No time for Puts! gOgOgO!!
Bulls made money.
Second, came the Wyckoff distribution we have seen all year long in 2022, right to the last trading session; Santa didn't come.
Bears made money.
Now, come Phase 3. All retail is bearish; no one expects price to rise; therefore it will. All your poots will melt and shorts dwindle, bear shares will be destroyed when price rises and time decay eats them away as a mighty bear flag unfurls. Retail investors will perk up and load more stonks because;
A Golden Cross is forming; "The Bull Market is Back! Yay!"
VIX will get crushed, and Bears will lose all or most of their money.
Then comes the bitter surprise... a Zig-Zag correction of monster proportions with a double bottom.
Bulls will lose all or most of their money and bears will be out of cash from their massive losses on the bear flag unfurling.
By EOY 2023, no one will have any money left.
Then the cycle begins anew!
Note
Folks asking, what you bullish now? Why you flip?Neither bullish nor bearish yet. Waiting, waiting to see what it does.
would do nothing until we see fomc reaction this week.
this thing is tricky and can go either way.
this breakout could be a fakeout.
double lower top here could be edge of the precipice.
all prior bear markets ended in capitulation with vix >>40.
vix high last year was <36 in spite of the terrific selling pressure.
because the selloffs were fairly orderly, vix never really spiked.
vix measures put/call demand, in the covid crash it went over 80.
in 2009 it went over 90. in 2003 it hit 43 at capitulation in Y2K crash.
panic selling drives put demand. we buy stonks when everyone trades their stonks for puts.
this bear has behaved very much like the 2000-2003 bear, that lasted 30 months...!
notably, VIX peaks before the bottom price is reached. this because panic peaks first.
the bottom comes after a final slow grind, sometimes months after the worst panic.
so there is no need to worry about 'missing' the bottom. in 2003 it made a triple bottom!
if this beast will crash it will take months or even all year, the bulls would return in '24 if so.
after a crash of that magnitude the recovery will take six to ten years.
so, if this breaks down 50% it will be 2030 before we see SPX 5K again.
let's see what the market gives us, and take it.
Trade active
Made some off poots. Do not back up the putwagon and expect to make mint, anything can will and has happened on fomc days. Patience!Note
WOW. NUTS. Hopium rally from Hell EOD. Get ready for a big dump.This was classic FOMC JPow. Sold off until 2:25 then the rocket launched when he starts talkin. DJI went -440 to +170, 600+ pips. SPX -40 > +70 then a 30-piprolloff in last minutes. NQ 400 pips from low to HOTD.
These nutty moves always come at 2:30 after the 2pm release. Typically gaps down and sells back next day.
Brutal on shorts but just another bull trap imo.
Trade active
FGS damn Meta this the second time it did this, mad bull on nothin but smoke n mirrors. Zberg says, ' ER sucked but it only gets better and soon!' Ridiculous.TBVH the PA in glamour stonks is frothy again and stinks of another trap. Massive gap on NQ just nuts.
Don't touch dis!
Note
Moves faster than we imagined, months become weeks, weeks become days, and days' moves occur in hours...ST2: The Wrath of Khan
Note
Revisiting this idea after 3 months, look how it filled in the chart... could be setup for a massive dump imo.Note
Rejection after Tues AM gapfill, bearish close Weds... could get ugly fast.Debt deal is likely 'sell the news' event. Don't count on it lifting this market.
FOMC in 2 weeks. They probly gonna jack the rates one more time, jobs and inflation numbers not coming down.
Trade active
Shorting this rally in SPXS, SQQQ, SDOW. Opening starter positions. Another irrational mad meltup. OFC can get higher still. Who is buying at this price?! Retail imo.
18B retail money went into SPY in May. Just SPY. Nuts!
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.