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This isn’t the short you’re looking for, move along. – TVO MB 2-07

After a long January hiatus, distribution has finally returned to the market. One high volume red day in a sea of accumulation may not be the kind of monumental short the bears have been itching to hang their hat on, but it’s something to watch out for nonetheless.

I’m sure some folks are thinking, hey, we had the big bottom so why not the big short?

Well, nailing the December bottom doesn’t automatically make you a market top expert. Even though TVO is now heading back down from a peak above +8.0, I’ve seen plenty of similar cases where SPY just kept going higher.

This has made me realize that shorting is quite a different animal and should be treated as such.

The Heat Gauge spent most of the day SCORCHING and higher, but managed to simmer down towards the end of the session. This has the makings of a shakeout written all over it with possibly a Friday morning flush across the indices to finish the job. Look for HG to COOL off by Friday’s close or else this pullback could extend into early next week. -MD

Sentiment: INSATIABLE – Big institutions are buying like there’s no tomorrow.

Volume: 12% – Today’s volume was higher than the previous session.

Real Feel: SWELTERING – Bears were in control of the session with a slight trace of buying under the surface.

Cycle: OVERBOUGHT III – Retail investors have bitten off way more than they can chew.

Portfolio: HEDGE – The market is over saturated and long-term investments warrant some protection.

Next Day Move: SIDEWAYS DOWN - The probability that SPY will close positive in the next session is 52%.

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