With layoffs, bankruptcies and production shut-downs, the energy sector may be setting itself up for higher oil and gas prices; especially this coming winter.

There’s potential for brutally cold winter temperatures from decreased sun-spot activity (called solar minimum) while at the same time producer output is contracting or disappearing altogether

In a paradoxical price action set-up, UNG, the commodity tracking ETF, may have just signaled a long term bottom.

Discussion and technical analysis of UNG is here.

As of this post and with natural gas prices declining for so long, looks like today’s action is a short squeeze.

Now is the winter of our discontent

Richard III

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.

We’re just one month shy of exactly 5 years since the biotech top of July 2015.

For those five years, biotech has struggled higher with sideways, corrective price action.  Only within the past two months, has IBB made it to new highs.

A sideways market is a bear market as dollar purchasing power drops steadily.

Bearish divergences seem to be everywhere.  Divergences on both daily and weekly charts:  MACD on the daily, RSI on the weekly.  Even on the monthly chart, MACD lines are divergent.

Last session (Thursday) had IBB attempting to push higher.  Up-volume contracted by 51% from the prior (down) session; another bearish sign.

Biotech is set to reverse in a big way.  In what looks to be a possible last ditch attempt to cash-out, news was released that Texas has re-imposed restrictions.

IBB’s response was to push slightly higher for about an hour.

After the blip, price action reversed and continued lower; posting new daily lows right around 2:00 p.m. EST.

The move higher has failed.

There’s no more powerful set-up in the markets than a failed move.  Failed moves show one side has reached exhaustion.

Well followed market sites such as Money GPS and Sajad, have their respective comments sections expecting the Plunge Protection Team at any moment.

What if that ‘team’ has accomplished their objective?

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.

In today’s trading session, biotech IBB, was stretched to the extreme; coming within 0.30 points of making a new weekly high.

Doing so, would have negated the bearish (reversal) case that’s been presented on this site over the past six weeks.

Late in the session, price action began to erode and ultimately closed posting a reversal bar.

Even though IBB posted a reversal, the actual close was higher than yesterday’s.

That fact holds out the possibility of higher prices.  It’s the way of the markets.

Who’s in control, bulls or bears, is always under contest.

If the next session moves lower and posts a new daily low, we’re at a pivot point; a trend change and potential for much lower prices.

A long term view of biotech shown here has the Relative Strength Indicator in a significant bearish divergence.  From that perspective, biotech is out of fuel.

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.

As it becomes more apparent the entire ‘mask experience’ was a mirage, a fabrication, there may be no bottom in sight for biotech.

New highs for IBB back in April, prompted this video ‘analysis’ clip.

Biotech, moved even higher from there.

Anyone shorting IBB (via BIS or LABD) back then, most likely covered with a significant loss.

Now, things look different.

In classical analysis, Wyckoff parlance, what’s been going on is called an “up-thrust”.  It’s an archaic term to describe a false breakout:  A reversal.

Biotech may actually be one of the market leaders to the downside.   It’s already made new highs and is reversing now.   

The overall market, the S&P could defy gravity and prognostications for an immediate crash by making its own new highs before rolling over.

A technical chart and nascent trend-line of IBB, is here.

If we keep getting lower lows and price action stays within the trend, there’s significant downside potential.

Every major corporation has the same tag line … it’s all about the “experience”.

Their goal’s nothing substantial; just the ephemeral. 

Shadow stats reports that real unemployment is at 35%; already way past 1930’s depression-era levels.

We won’t have to go searching for the experience.

It’s coming to us.

Even those still employed are wondering if they’re next or what’s going to happen if/when their pay is cut.

As a result, huge masses have poured into the markets; Desperate for income or distraction from collapsing food supplies, society out of control and free-fall economy.

Meanwhile, the market itself has already told us where to go and where to look.  The S&P just opened down 2.3% and may be starting the next leg lower.

Is that the place to go … the S&P? 

The S&P is probably the most computer controlled, algorithm induced, manipulated market in the world.  All eyes focused on it.

Back around 2009 or so, my firm stopped trading the S&P and moved on to a more effective approach.

A strategic view was developed.  Trading methods created that were focused on positioning instead of instant (day-trade) gratification.

With that in mind, biotech has been the topic of discussion and analysis.  Price action in IBB has been tight and getting tighter.  That allows one to take a low-risk short position (not financial advice) if so desired.

At this point, knowing where to go and where to look, may be the only essential experience.

It’s rigged.  It’s been rigged from the beginning.

Back in the day, the father of technical analysis, Richard D. Wyckoff, called this sort of manipulation, the ‘composite operator’, or the ‘central mind’.

If one could figure out what the big players were doing, there’s opportunity to position for profit.

That’s why tape reading was (and is) so important.  The moves and potential moves of the big players show up on the tape.

So, what’s happening with the cat and mouse chess game now?  Where should one look for potential profit?

A better question is not ‘what’s happening?’, but rather, ‘what’s not happening?

Until price action proves otherwise, what’s not happening is biotech (IBB) is not participating in the swift rally over the past month.

It stopped-dead right around May 13^th.  That’s where to look.

While all others are focused on if/when the market’s going to new highs or crash, biotech looks like it’s under distribution.

Attempts to move higher are being sold off.  The market has stalled.

Things can change quickly.  Distribution can turn into accumulation if there’s a breakout to new highs.  However, at this point, price action is tight and (short position) risk is low.

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 bond market’s either fully under control with a planned collapse; or it’s out of control and still collapsing.

No matter who or what is at the helm, bonds are down and rates are rising … and they’re rising quickly.

The real harbinger will be bond behavior if/when the overall market reverses.

If the market heads lower and bonds head lower as well, that’s when the real panic starts.  There’ll be no safe haven.

Making it more surreal, throw in gold with its own reversal.

Trillions being printed, money spigots wide-open, yet gold is lower.  Something else is going on.

Then, there’s biotech.  For the past three weeks, biotech has not participated in the market rally.  It’s a clue we may be at a significant, sustainable, dramatic reversal.

It’s been five trading days since the ‘Time’s Up‘ post and IBB has made a series of new daily lows; including today.

The market is set to reverse.  The debt bomb fuse has been lit and bonds are already heading lower with rates rising.

This slow but persistent reversal was first covered here.  Now, the TLT is nearly 3% lower; a significant move for such a massive market.

As of this post, real estate (IYR) is attempting a breakout above resistance.

A failure here could be lethal as this market has been severely lagging the overall ‘recovery’.

Opportunities abound to generate profits and income; but it’s not on the long side.  Everybody’s a genius in a bull market.

It’s the bear market where fortunes are made … quickly.

The bank sector, XLF, is attempting to breakout above resistance.

A failure here, indicates a pivot to lower, possibly much lower levels.

This chart (6/2/20, update) shows the current situation.

The market has just opened and XLF is hovering near its recent highs.

An XLF move below the prior day’s low of 23.34, means a possible failure; the beginning of the next leg down.

As just reported here, there’s no recovery in sight.