CarMax Crash … What’s Next ?

First, The Dead Cat Bounce …

What was said back then

“As the economy (if you can call it that) falls off the cliff, one of these two (KMX, CVNA), is not likely to survive.”

It looks like Carvana is swirling down its ‘disruptive’ vending machine wormhole, leaving CarMax to pick up whatever’s left of the car ‘consumer’.

The latest earnings release of KMX, confirms what’s left of the typical consumer’s purchasing power, is evaporating if not completely gone.

Still Clueless …

It’s not necessarily the linked earnings report on KMX that’s important, but the comments.

We’ll not call out any specific one but after reading them, there’s an uneasy sense, the typical American is still wandering around in a type of hypnotic, delusional state, namely, mass psychosis.

They’re stunned … ‘looking for the bottom’.

Everyone has their own timeframe but let’s see where an ultimate bottom for KMX, might be on the charts below.

CarMax, KMX, Yearly Chart

The big … big picture

There are three-months left in the year but already the thrust energy lower (magenta arrow) for KMX, is the highest in nearly 26-years of data presented.

Not even the ’08 – ’09, meltdown had downside energy anywhere close to what’s happening now.

That’s a clue in itself, we’ve got a long way to go.

How long, is long?

The quarterly chart of KMX gives us a clue where we might see a ‘bottom’.

CarMax, KMX, Quarterly Chart

Above, we’ve got a terminating wedge (blue lines) that’s been decades in the making.

As the magenta arrow shows, there could be small blip up to resistance in the 85-area before potentially rolling over into a descent that projects to the 4.00, level.

If and when that happens, CarMax rival Carvana, may be long gone; its disruptive vending machines possibly being used as homeless shelters or insect farms.

Stay Tuned

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Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

The Danger Point®, trade mark: No. 6,505,279

Fractal Symmetry … & … Biotech

Repeating & Infinitely Complex

Broccoli

Every market has its own characteristics; patterns that repeat.

Biotech (SPBIO) is no different.

Based on its own repeating fractal characteristics, probabilities continue to point to the downside; but first, the ‘reset’.

Out Again, In Again

Everyone has their own style, risk, and pain tolerance.

What’s presented on these posts is NOT financial advice.

It is however, how one professional is approaching, managing, and positioning in what may go down in history as the largest financial, societal, and political collapse ever.

Let’s not lose sight of that ‘macro’ condition.

It’s difficult to grasp the enormity. The ‘pundits’ are already looking for a ‘bottom‘; a bottom that in reality, is probably years if not decades away.

This past Friday, saw a complete exit of the short position LABD-22-05 & TDA-LABD-22-02 (not advice, not a recommendation).

As we’ll see below, once SPBIO, price action showed itself to be failing its up-move and subsequently reversing to the downside, the short was re-established: LABD-22-06.

In effect, the entire short trade was ‘reset’.

At the close, LABD-22-06, was well in the green.

By the way, After The Close … was released just before 6:00 p.m. EST, yesterday. That gave anyone who wanted, a two-hour window to position in the after-hours market (not advice, not a recommendation).

Now, on to the fractals.

Biotech SPBIO, Weekly

We’ll go straight to the marked-up weekly.

The Fibonacci retrace tool shows SPBIO, dipped down to 61.8%, before rebounding higher; a deep retrace, indicating overall upside weakness.

The zoom version below shows the detail of price action rebounding off the 61.8%, then going straight to 38.2% before backing-off.

Here’s The Fractal Part (below)

Getting closer-in on this past week’s action, we’ll use an hourly chart.

It shows the closing low on Monday, the rebound from Tuesday through Wednesday, the retrace on Thursday and the Up-Thrust on Friday.

SPBIO, Hourly

And with zoom.

Once again, during the retrace, price action went to the 61.8%, level just like it did on the weekly.

Characteristics repeating on multiple time frames.

Deep retrace typically indicates overall weakness.

Test, Fail, or Not

This coming Monday, anything can happen.

Price action can come back to the up-thrust and then reverse lower: Test.

It can come up and penetrate the up-thrust, moving decisively higher: Fail

It can gap-lower, move lower, never look back: Not.

The Danger Point®

That’s where we are now.

If price action moves decisively higher and penetrates Friday’s high, it then precipitates an exit of the LABD position.

The other two scenarios, indicate maintaining the position; adding to the size as the market allows (not advice, not a recommendation).

Stay Tuned

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Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

The Danger Point®, trade mark: No. 6,505,279

After The Close …

Biotech Fails To Move Higher

Most important of all in trading, are the failed moves.

Failed moves offer the potential for low-risk entry.

What originally appeared to be a strong launch higher that may have taken SPBIO to a 50% retrace, failed at 38%.

The sector closed up for the day but far below its session high.

Biotech SPBIO, Daily

Price action closed well below the resistance area.

Zoom version below shows slight new daily high (mini-up-thrust) before retracing lower.

The technical details of what is going in will be covered over the weekend.

However, from a positioning standpoint, the short was re-established (via LABD) as it was obvious the move higher was failing (not advice, not a recommendation).

The new short position is labeled LABD-22-06, with an initial entry of LABD, 22.12.

More details to follow.

Stay Tuned

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Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

The Danger Point®, trade mark: No. 6,505,279

Biotech … The Update

Short & Sweet

Markets are in a rebound (somewhat) higher which includes the biotech sector SPBIO.

All positions have been exited in anticipation of a retrace to the 50% area shown below (not advice, not a recommendation).

The daily chart of SPBIO, notes the most likely location at this point for a corrective move.

The trendlines are presented on the chart to show we’re below 50-Day and 200-Day averages … indicating probabilities remain to the downside.

Note the ‘compression’ of those averages … another clue we’re in a retrace and not a complete reversal.

The blue (retrace) line has been extended … showing that’s it’s also an axis line about which SPBIO is oscillating.

Summary

On the sidelines for now … waiting for another entry opportunity (not advice, not a recommendation).

Stay Tuned

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Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

The Danger Point®, trade mark: No. 6,505,279

Bear Market Bounce

And Then … It’s Gone

How do you know it’s a bear market?

Sharp up moves like yesterday, only last one day … if that much.

We’re talking specifically about the bond market and the BOE announcement … the effects of which have already faded.

It feels like the 2008, meltdown only 10-times larger.

Remember, there’s no money left to save it (the market) this time.

Yesterday’s update discussed the potential for biotech SPBIO, to rally … which it did.

However, when looking at the daily close chart of SPBIO ($SPSIBI) below, we see that price action stopped right at the confluence of two trend-lines.

Biotech SPBIO, Daily Close

Next, we’ll look at the leveraged inverse fund LABD.

It was a stiff whack downward; then again, price action is confirming a trend … and potential channel.

SPBIO, 3X Leveraged Inverse LABD, Daily

The lower trendline does not look like much.

However as noted, it’s rising at approximately + 5,900%, on an annualized basis.

Summary

It’s 15-minutes before the open and LABD, is up about +3.87%, in the pre-market.

For today, the lower trendline is the one to watch.

A decisive break (and close) below this line signifies the current move is over and there’s something else at work.

Positioning

Yesterday, the LABD-22-05, position was reduced by about 8.5%, to maintain margin requirements (not advice, not a recommendation).

As has been an on-going plan for this trade, position size (in LABD) will be increased as the market allows (not advice, not a recommendation).

Stay Tuned

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Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

The Danger Point®, trade mark: No. 6,505,279

Decision Point: Biotech

To Bounce, Or Not

Final stages of the bear market?

That’s what the ‘analyst’ at this link has to say.

If you know your market history, ‘opinions’ like that were pushed out all the way down to the bottom after the crash of 1929.

As for me, I’m going with the 78-year-old money manager that was quoted saying (paraphrasing):

‘It’s the biggest bear market of my life.’

Back to the analyst above, another opinion could be (looking at price action), we’re not in the ‘final stages’ of anything … except maybe the beginning.

Before we leave the topic, IYR real estate closed at 103.84, when the ‘old-timer’ spoke. Yesterday’s close was 81.43, down -22%, from that level and down – 30.3%, from all-time highs … and counting.

The ‘final stages’ of this decline is (potentially) years, if not decades away.

Biotech Decision Point

With about twenty-minutes before the open, biotech SPBIO, is set higher with leveraged inverse (pre-market) LABD, down approximately – 1.6-pts. (-6.3%).

We’re at a decision point for the sector.

Looking at the chart of inverse LABD below, a trend (and potential trading channel) is clear.

This morning’s gap-lower open is set to test that trend.

SPBIO, Leveraged Inverse LABD, Daily

If biotech remains in its downtrend that started at the August 11th, high of 7,399.86, expectations are for some kind of upside LABD, reversal within the first hour of trade.

If not, price action then opens the door for a move above established resistance at SPBIO, between 7,400 and 7,700.

As unbelievable as that would be, it could still happen.

Summary

The first hour of trade will be watched closely.

Price action itself will define if SPBIO, has fished its down move or if we’re just confirming the trend already established.

Stay Tuned

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Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

The Danger Point®, trade mark: No. 6,505,279

Home Depot’s ‘Head & Shoulders’

Plan The Plan

Know what’s happening now; then plan for what’s likely to happen.

There could be only a small window of opportunity to acquire needed items (at a deep discount) to whether a sustained level of social, financial, and infrastructure chaos.

It’s no secret the clothing retailers are, and have been offering product at heavily reduced prices.

What about the really important stuff?

Stuff like tools, generators, chest freezers and ‘protection’.

Home Depot (HD) Weekly

We’ll get straight to the analysis; showing HD may be forming an H&S pattern, about to break below the neckline.

If HD breaks lower in the vicinity shown (may or may not happen), expectations are for a measured move to the area somewhere around $160-ish.

A drop like that represents a decline of about – 62%, from all-time highs; plenty of motivation for herd following ‘corporate executives’.

That would be the time and the location to expect those executives to throw in the towel and offer product (the good stuff) at a deep discount.

The ‘Experiment’

If there’s another market leg lower, it’s likely to be chaos.

Banks may restrict access; credit cards may not work, and nobody will want to part with actual physical cash; likely to be in short supply.

With that in mind, a product has been picked from a Home Deport nearby that would definitely be of use in a grid-down, social chaos situation.

The ‘Generator’

So, here it is. A dual-fuel generator.

It’s a bit pricey at nearly $1,000.

Let’s come back to this if and when HD gets to $160-ish and see if our grid-down product is ‘on sale’.

Stay Tuned

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Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

The Danger Point®, trade mark: No. 6,505,279

Trading A Silver Collapse: Part 3

No One Expects A Long Term Siege

This time is different.

This is not 1987, or 1998, or 2000, or 2008.

In those cases, once the market reached bottom, the recovery was sharp (’98, ’09) and if not, was steady as in ’87 and ’03 – ’04.

In each case, interest rates were high enough to allow ‘fiddling’ that would in turn, result in the desired (i.e., up) market response.

Ammo Is Spent

This time, we’re in another melt-down and there’s no ammunition left to save the market.

That all got spent in ’08.

Back then, those witnessing firsthand, efforts like TARP, could feel in their gut, ‘there won’t be a (save) next time’.

So, here we are.

Always Fighting The Last Battle

It’s been said, Generals are always fighting the last battle; that is, what happened last time.

In line with that thinking is the (YouTube) idea, once we get a ‘collapse’, it will be time to rush in and scoop up ‘assets’ at fire sale prices.

That idea would have worked quite well in ’08 – ’09, which was last time.

On The Brink

Last time, there was no threat of nuclear war.

There was no infrastructure collapse or crop failures and looming world-wide famine (just to name a few).

There was no ‘elephant’ either.

This article, just out, has California front running the elephant with ‘composting’ signed into law a few days ago.

Silver, The Collapse of Demand

It’s not the metal itself that’s the problem. Having some is always a good idea.

It’s the idea of trusting in these ‘things‘ to be one’s savior.

There are larger forces at work that will likely overshadow owning something you can’t eat.

Once again, this just out: World’s largest produce market (Paris) goes up in flames.

At some point, there will be a collective world-wide realization … it’s the food supply.

When that happens, the expectation is, all ‘assets’ will be heavily sold off, including precious metals.

Silver (SLV), Monthly Close

The monthly chart shows the line to watch; the downtrend that started in late March of this year.

If SLV maintains its current rate of decline, it will be April of next year before we get to the support level shown below.

Pushing (and closing) below well-established multi-year support (orange line), is no easy task.

We would likely need to have some sort of catalyst to help price action get to those levels.

Once below support (‘Target Area’), SLV would then be in Wyckoff spring position.

Summary

As always, anything can happen; precious metals could rally starting at the futures open in a couple hours.

Price action itself, is the final arbiter.

Most ‘investors’ are not prepared for a long-sustained siege-grinding rachet lower, possibly to single digits.

If that happens, then will be the time to assess the potential for a significant long-term rally.

Stay Tuned

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Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

The Danger Point®, trade mark: No. 6,505,279

The Biotech Breakdown …

Massive Short Volume, Proves Correct

Short-side volume was the key.

The August 13th, update linked here, identified unprecedented volume posting on the short side.

It’s also interesting to note in the very same report, there’s a link to ‘bears capitulate’.

If there was actually some value to the financial press, this would be it; help provide contrary indicators.

So, here we are just over a month later and biotech SPBIO, appears to be in free fall.

Biotech SPBIO ($SPSIBI), Weekly Close

The prior update had this so say about positioning (not advice, not a recommendation):

“Figuratively speaking, everything’s been dropped to focus exclusively on this sector. It’s obvious, what’s going on at this juncture is unprecedented.”

From that August 13th update, the main account for my firm has increased the size of its short position (LABD-22-05), by approximately 34% (not advice, not a recommendation).

Summary

Unprecedented short-volume, points expectations to some kind of unprecedented bad news.

When the market goes south, bad news comes out.

Stay Tuned

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Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

The Danger Point®, trade mark: No. 6,505,279

No ‘Soft Landing’ or ‘Hard Landing’

There’s Only, ‘Collapse’

The ‘narratives’ are false.

There’s no ‘recovery’, no ‘soft landing’, no ‘hard landing’.

There’s no ‘housing boom’, no ‘inflation’, and maybe most of all, no (sustainable) ‘Electrical Vehicle’ market.

What there is …. is ‘collapse’.

Collapsing food supply, collapsing economy, collapsing real estate, collapsing employment and collapsing (electrical grid) infrastructure.

How do we know that?

The price action (the market) itself, says so.

Wyckoff, The Rest, and Gold

As stated in the last update, unlike other analysis methods, Wyckoff looks at what the market is saying about itself.

The market itself, defines the next likely course of action.

Two days ago, gold was used as the example.

Contrary to the ZeroHedge report linked in the prior update, Wyckoff analysis revealed the most probable direction for gold, was down.

The Gold (GLD) Market

The Fed announcement late Wednesday, resulted in a ‘blip’ higher for gold that stalled-out, the next day.

However, that announcement, may have confirmed a trend change in GLD.

Looking at the chart below, it’s possible that Wednesday identified a more aggressive trendline, lower.

Gold (GLD), Daily

It’s about an hour after the open.

This is how it looks for GLD.

The new trendline and trading channel are clear; trending lower at approximately -60%, annualized.

The next chart is a zoom of the pivot area.

If there ever was going to be a Fed ‘Pivot’, this was it. 🙂

The price increases being touted as ‘inflation’ are clearly the result of supply destruction.

You can’t have 90+ ‘food processing plant fires’ in the past year or so and not have it affect prices at the supermarket.

Same goes for crop failures or lack of harvest world-wide.

Summary

As always, anything can happen. Gold could reverse and mount some kind of rally.

If somehow, there’s a change of demand, it will show up on the tape (the chart) as a change of character.

So far, there is none.

Most likely direction remains to lower levels.

Parting Shot

Just to illustrate the point of ‘collapse’, we’ll leave off with this recent report from Scott Walters.

The real estate example shown is the River Oaks area of Houston … Highly affluent.

There’s no debate.

It’s a collapse, when a house has to drop $20 million, from $26.5-mil to $6.5-mil, and Still Not Sell!

Stay Tuned

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Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

The Danger Point®, trade mark: No. 6,505,279