Monthly Archives: January 2021

Real Estate, Ready?

January 5, 2021 By in BIS, DRV, IBB, IYR, LABD, Positions

The real estate index IYR has been struggleing at resistance for months.  Yesterday’s action was a swift break lower to the bottom of the range.

Inverse fund DRV (3X inverse IYR) had is largest single day gain since mid-May of last year.

The weekly chart shows the four-month struggle at resistance as well as MACD bearish divergence.

IYR may attempt to test slightly higher (DRV down) during this session.

If so, we’ll be looking to position short via DRV; not advice not a recommendation.

Moving on to biotech.  Yesterday’s action was a good example of negative bias in LABD.  Even though IBB closed lower, LABD closed lower as well.

The LABD position was closed out as shown (above) and the BIS positions maintained.

Note the R-Exit value.

This represents the gain on the amount risked. If $1,000 was risked on the trade, it returned $8,540.

Update will be forthcoming if/when a DRV position is established.

Charts by StockCharts

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.

Dow, S&P, Outside Down

January 4, 2021 By in Biotech, BIS, DIA, Dow 30, Positions, S&P 500, SPY

So, this is it?

As this juncture (11:06 a.m. EST), both the Dow and S&P have key reversals; and now the QQQs, and Russell 2000, have just joined them.

If they hold and decline from here, reversing from all time highs, we can add that data to our empirical “Holiday Turns”

Holiday turns … markets tend to reverse just before, during, or just after a holiday week.

In the biotech arena, this morning’s gap higher (IBB) closed the distance from price action to the stop for inverse funds BIS and LABD.

That closure opportunity was used to increase the short position (via BIS) in one of the managed accounts.  Not advice, not a recommendation.

The IBB bearish divergence is beginning to take shape.

Positions:

Note: “Close” prices as of 11:03 a.m. EST

Charts by StockCharts

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.

Bond Bears Exhausted

January 3, 2021 By in TLT 2 Comments

About a year after Teddy Roosevelt left office, Wyckoff published his seminal work; Studies in Tape Reading. That year, was 1910.

Wyckoff was the one that defined support, resistance, accumulation and distribution.

He was the one that discovered markets have a power of their own; having nothing to do with any fundamentals.

Wyckoff found that if you can decipher price action, you can determine the most probable direction.

A first edition Wyckoff ‘Tape Reading’ text … if you can find it, goes for about $3,500. 

Even lesser known books of Wyckoff such as this one, go for hefty sums.

In his ‘Tape Reading’ text, on page 102, he shows a diagram that represents price action exhaustion.

His discussion (repeated below) is concerning the bull side. 

For today’s chart of TLT, we’ll mentally swap every ‘bull’ notation from Wyckoff with ‘bear’ and conversely, every ‘top’ notation with ‘bottom’, every ‘buy’ notation with ‘sell’ and so on.

 “ … and you see what the chart of  a stock or the market looks like when it reaches a point of dullness.

These dull periods often occur after a season of delirious activity on the bull side.  People make money, pyramid on their profits and glut themselves with stocks at the top.  As everyone is loaded up, there is comparatively no one left to buy and the break which inevitability follows would happen if there were no bears, no bad news or anything else to force a decline.”

The ‘dull’ period he is discussing is shown below in TLT.  It has repeated the diagram on his page 102, in near identical fashion.

We have supplementary evidence from Steven Van Metre during this report, the bond bears have started to back off their historic short positions.

They are trapped and exhausted; all their selling has not collapsed bonds as anticipated.

So, let’s see what happens next.  According to a text written 110-years ago, we are expecting a rally in bonds .. a massive rally.

Quotes used with permission

Charts by StockCharts

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.

Carvana: Ready To Crash

January 2, 2021 By in CVNA

Carvana (CVNA) has no P/E ratio. 

It’s almost like Dean Wormer, discussing the Delta House’s grade-point average;  “Mr. Blutarsky, Zero-point-zero.”

From a chart perspective, CVNA has spent the past nine months forming a terminating wedge.

That wedge had a breakout to the downside during the last trading week of 2020.

No amount of positive bias last Thursday, (markets making new highs) was able to lift CVNA.

The stage is set.

Measured move from the nine-month wedge projects CVNA to the 87, area; a -63.7%, decline from current levels.

Charts by StockCharts

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.

BABA Bust

January 1, 2021 By in BABA

Between BABA, 251 and 253, we can expect a test and reversal.

Thursday, December 31st, Fibonacci Day 5, from the most recent low.

Wednesday, January 6th, is Fibonacci Day 8, from the low.

Charts by StockCharts

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.