. . . . . Compare 4DMLs using NDX or COMPX . . . .
Yes, Spirit. . .the 4DML squeeze could certainly be a 5DML .. .there is plenty of history to back it.
But of course WE can't let Wall Street greed dictate our own. . .so we are happy covering our 4DML. . .and waiting from the sidelines to see how it plays out.
Incidentally, the one thing you hardly ever see is a 3 day drop and return. . .I guess the street figures, "what's the point of a sustained decline in tech stocks if you can't squeeze them out and liquidate their assets."? And if that is the consensus, then it demonstrates the level of greed and disdain that abounds on Wall Street toward us and our money.
Unfortunately, too many traders play with their accounts margined to the max. So "fresh" money is all too often required to satisfy the call. And therein lies the rub.
Technically, liquidation could happen any time. But with most large brokerages margin calls do allow for a 3 day period when the debt can be paid ahead of liquidation.
Liquidation generally is executed during the final two hours of trading on the 4th day after a call. Of course the 5DML catches more traders yet.
Keep in mind that the stocks which have the most margined interest often start their decline AHEAD of the COMPX or NDX, so it is difficult to see what truly happens without a study of individual stocks.
****NOTE: This Market Manipulation play SHOULD be disturbing to everyone here. It is proof of blatant manipulation of the entire market for the purpose of stealing YOUR money.
Whether the squeeze is started by the large Brokerage Houses, Hedge Fund Managers, Market Makers or others. . .now that we are sensitive to the many types of manipulation, we can spot them from afar. And if we can recognize the manipulation at a distance, we can protect ourselves from it. . . or as we saw the past 2 weeks, even profit from it.
OT> For any New Testament scholars out there. . .the Apostle Paul stated that we should be ever vigilant in watching out for "the enemy", so that we can recognize him at a distance. . .before he gets so close to us that we can no longer see him and are consumed by him. I find many parallels between spiritual warfare and market warfare.
.
.
.
. . . .Get out your 60 minute charts and follow along . . . . .
We have discussed the similarities between the 60 minute chart of December 31, January 3,4,5 and 6 with the 60 min chart of September 1,5,6,7 and 8. For further comparison, take a look at some other examples of the 4 or 5 DML Margin Liquidation squeeze beginning on January 24, 2000, May 16, July 17.
There have been dozens of Margin Liquidations in the past 3 years. . .but I'll just tease you with a quick glance at some of the interesting highlights. . .
For the classic signs of a Margin Liquidation Squeeze, take a look at the 4DML on March 10th. Again with all the telltale signs, starting with a sharp rally, where it feels as if the adults have left the children to run the amusement park. In this case, we saw a 300+ point rally during the 2 days leading into March 10. Next is the classic morning spike which ALWAYS signals the first day of a DML squeeze. And the final hour plunge on day 4 is what verifies that it is an authentic manipulated Margin Liquidation Squeeze Play.
April 10, 2000 - The Mother of All Squeezes
The "Most Effective" Margin Liquidation squeeze began April 10th. It was a massive 5DML. Note that on both the 4th day and 5th day of the squeeze, the lows were hit in the final few hours of trading. It has been reported that the final 2 hours of the day is the "standard" time when most brokerages perform margin liquidation robbery.
The April 10 5DML started with the usual spike. . . in this case, a big rally of 280 points on the NDX [Naz 100]. . . followed by a gruesome plunge from above 4300 to 3140 by the end of the 5th day [April 14]. 1160 points in 5 days!!
Or from the perspective of the Nasdaq Composite Index, which covers virtually every stock listed on the Nasdaq. . . .April 10 started with a 274 point spike leading into a high the start of April 10th of 4474. By the end of the 4th day, we were at 3679, a 795 point drop. But evidently that wasn't enough blood from the turnip. The 5th day gapped down sharply and took us down another 400 points! We reached capitulation at 3227. 1247 points lower than where we began just 5 days prior.
Now as most Margin Liquidation squeezes, the next few days bounced hard enough to rub salt in the wound of those who were injured in battle. On the April 10 5DML, the bounce was just over 600 points in 2 days to 3833 by the morning after.
March 24, 2000 - 5DML
A 5DML is when in the final few trading hours of the 5th day, we see a plunge to new near-term lows. [I have only seen one 6DML. . . that was on July 19, 1999 . . .I did call that plunge here at HOME, for those wondering].
March 24th was a 5DML. The sharp rally which triggered the squeeze lasted 3 days and brought the COMPX up 600 points. . . .to 5079 by the 24th. . .again evidenced by the morning spike up. By the final hours of the 4th day, March 29th, we had dropped back to 4642. By the end of the 5th day we hit 4357. The next 3 days were not part of the squeeze. . .I don't recall what was moving the market by April Fools day. . . but the action is not at all similar to a DML squeeze.
May 1, 2000 - Back-to-back 4DML
Beginning May 1, we have 2 Margin Liquidation squeezes in a row. The start of the squeeze play is easy to spot. . . it is a 1 or 2 day sharp rally preceding an equally sharp decline which lasts 4 days. The 3rd day of a 4DML is often a short-lived relief rally. Typically new lows are set in on the 4th day, but not always. In the case of the May 1 squeeze, the 4th day does not put in new lows. We see a second consecutive 4DML squeeze starting with the sharp spike at the May 5 open. . . taking the Naz indices to new near-term lows by the 4th day.
OT> **NOTE: Does anyone wish to co-author a book with me called "Liquidated! Wall Street Power Brokers devastating weapon of greed revealed. . .CREDIT. [A real-world account of Market Manipulation, Margin Liquidation and Investor Capitulation"]? ? ? If so, please PM me or write me at Rande@writeme.com. . . include your PROFESSIONAL qualifications, etc. as EDITOR and/or published author. . .
Note: See copyright notice below. This page was reprinted by permission.
The January 24 squeeze was a 5DML. It was preceded by a 6 day orderly rally. The morning of the 24th saw the typical [but not necessary] sharp gap up in the Nasdaq futures. And about 4300 was the high early that cold morning. This squeeze was a bit unusual, due to the relief rally coming on the 2nd day rather than the 3rd. But by about 2:30 on the 4th day, as I recall, we got the late day cold plunge to a near-term low, confirming the squeeze play. 471 points were shaved off the COMPX by the final hour of the 5th day.
And on this squeeze we saw some capitulation the morning after, with the COMPX reaching down to 3748 triggering the February rally. You all remember that one. Biotechs sold off first, by the beginning of March. Then I called the top of techs. We jumped out with our booty. And the March madness began.
Now as 4DMLs go, January 3rd was not all that impressive. [The April 10 squeeze was the mother of them all.] But this latest squeeze was related to the January 3rd, due to investor sentiment. EVERYONE expected that money would flow into the markets beginning on January 3rd, 2000. And the 120 point gap up that morning on the Nasdaq caught nobody by surprise.
But what followed was shocking and completely unexpected. A 100 point plunge in the first hour of trading. That drop would set the tone for the week, the month and the year.
The final week of 1999 was exciting. It was as though everyone on Wall Street that played against the day and swing traders had gone home. And the tiny float thinly traded trashy stocks were popping along with the champaigne corks of the Millenium celebrations. The trading atmosphere was one of jubilance as one after another $1 dollar stocks were quickly worth $2, $2 worth $4 and so on. . . unabated.
But it was that first icy morning hour of Jan 3, 2000 that slapped traders into sobriety. And by the last few hours of January 6th, the fourth trading day of the New Millenium, the Nasdaq composite was down 450 points from where it started the year.
Not including this past week, there was only one other time when high expectations triggered the 4DML, and you won't believe when that was!!. . . .but I'll leave that for the book. I found 2 4DMLs in 98 and 4 clear 4DMLs and a 5DML in 99. . .with two others that were candidates. But none can compare to the volatility of the year 2000, and subsequently to the margin squeezes.
From a sociological perspective, in this new millenium we play harder, faster, riskier and with other peoples money. . . leaving the front door wide open for the robbers to come in and help themselves to our equity.
Enough for now. . . .buy the book!
Rande Is
.
.
.
.
Don't even think about it!
(C) Copyright 2000 M.3 Media, Inc.
Reprinted by permission |
