Gold is Down … What ?

Supposed ‘Safe-Haven’, Goes South

With this morning’s turmoil, gold “should” be higher, right?

Before we even get started, everyone needs to know or be reminded, the word “should” is a ruse; it’s a trap.

Just like there’s no crying in baseball, there’s no “should” in the markets.

Instead, we replace that word with any of the following: Expectation, probability, empirical, set-up, and not the least of which is, ‘price action’.

Case In Point

Gold is down hard but it should be higher.

Coming from that perspective, then leaves you scratching your head, attempting to figure out ‘why’ gold has not moved higher.

With that, off we go on a never-ending rabbit trail having full encouragement of the financial press; making sure you never find the answer.

On the flip side, coming from a Wyckoff perspective, we look at gold (GLD) and ask the following:

What is the market saying about itself?

That brings us to Friday’s action and the chart of gold (GLD), below.

Gold (GLD), Daily

Long-time users of this site may instantly recognize the set-up.

To help make it more clear, we’ll go down to the hourly chart and mark it up.

Gold (GLD) Hourly

There we have it.

The repeating pattern of “Spring-to-Up-Thrust.

Let’s go back to the daily and put in the same notations.

Gold (GLD), Daily

Following on with this morning’s action we have this.

Price action has already posted a new daily low; adding confirmation, the trend remains down.

The fact there was heavy volume this past Friday, sets the hook even deeper into the bulls.

This action, up-thrust plus volume, may result in yet another sustained pivot to the downside.

Summary

It took me twenty-years of diligent search to eventually find the answers to market behavior.

That answer came in 2007, in the form of Wyckoff analysis and the late David Weis, with his video, linked here.

I was fortunate to be mentored by him before he became somewhat of a star … having a waiting list a mile long.

After that, was the constant study of his daily market updates for more nuggets of wisdom.

In a nutshell:

Gold (GLD) reversed today, because price action got itself into an up-thrust condition after launching from a spring set-up.

That’s it.

There’s no CNBC, no Fed, no Fast Money, no Russians, no Hyper-Inflation; just the market, itself.

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

Weekly, Wrap-Up

The Usual Suspects

No. 1

‘Finger Snap’ Offense

As if to drive the point of yesterday’s post home, we have this just out from ‘Economic Ninja‘.

People are offended by him snapping his fingers at the beginning of each video.

You can’t make this stuff up.

But wait, there’s more.

Those same snowflakes go on to say they’re offended that ‘Ninja’ is planning to take advantage of the real estate crash; being liquid at the bottom so he can buy-in, at pennies on the dollar.

I wonder how many of these coneheads are ‘financial advisors’, but I digress.

No. 2

‘Sudden Adult Death’

Yes, ladies and gentlemen, after thousands, if not tens of thousands of years of humanity, we have a brand-new disease.

Doctors are “baffled”. Who can it be now?

Wheels are set in motion for decades of repercussions.

We’re still at that leading edge.

No. 3

More Airplanes Going Down

This would have nothing to do with No. 2, above, right?

Link is here.

No. 4

So, It Was Just The Flu, All Along?

Daivid Knight, in his broadcast talks about the weasels attempting to jump ship.

Take a look.

Good thing this site figured it out long ago and well before it was obvious.

No. 5

It’s The Dollar (for now), Not Gold

When the forecast does not go your way, especially for gold, all you have to do is say, “It’s all rigged”.

That’s not very useful; especially if one is attempting to allocate assets as my firm does.

The article linked here, says part of the problem gold’s not higher is because of the strong dollar.

Wouldn’t it have been nice to know, eighteen months ago, the dollar was in position to rally?

Like this post did, for example. 🙂

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

A War of Attrition

To Survive, Prosper, You Need To Have The ‘Stomach’

There’s nothing like the Vietnam war to remind us, the enemy on their home turf has the advantage and can exercise a war of attrition.

Similar to the Soviets in Afghanistan; the natives, the Mujahideen, wearing down the invading army month after month and year after year.

The Oligarchs and The Proletariat

Day after day, another food processing plant burns down; another fertilizer train mysteriously derails, a natural gas facility unexpectedly blows up.

‘So it goes’, as Vonnegut wrote.

Americans, except for a few, don’t have the stomach for discomfort. The Depression-era generation is long gone.

However, this site, is for that small few.

As can be seen with the above ‘events’, we’re in a long-term chess game. Adding a potential twist is this video at time stamp 12:50; seeds may now be dead-on-arrival.

Is the typical money management firm, or market analysis YouTuber, taking all of this into account?

Or are they still talking about ‘due diligence’, ‘fundamentals’ and what The Fed ‘has to do’?

A good number, if not the vast majority of these firms, may be on a course for self-destruction.

More chaos to come as that industry gets crushed.

With that, let’s review why there’s been so much focus on biotech and specifically, SPBIO.

The Major Indices or ETFs

As of yesterday, Friday, this is where the major indices stood in relation to all-time highs or ‘recovery’ highs.

Listed from smallest percentage loss to the largest.

Biotech SPBIO, has been down five quarters in a row and is working on the sixth.

Because of last week’s action, the sector may be poised for its most dramatic part of the decline (not advice, not a recommendation).

We’ve had an on-going analysis of the sector with recent links provided here, here, here, and here.

Positioning

If we’re about to have a market implosion in the coming week(s), SPBIO, has already set itself up to be the downside leader (not advice, not a recommendation).

That doesn’t mean ‘straight-down’, although it’s always a possibility.

The most likely price action is more SPBIO downside (LABD, higher), with some oscillation in the accumulation area shown on leveraged inverse LABD, below.

SPBIO, 3X Leveraged Inverse, LABD

Un-marked chart

Potential zone for oscillating price action.

Now, adding the trading channel, we see the possibilities.

In the coming week, there’s also the potential for a ‘test’ where SPBIO, rises and LABD, declines.

However, from an empirical standpoint, when a Friday has a violent down move that closes near the low, it increases the odds for downside follow-through the coming Monday.

Positioning

The data below is taken from one of the accounts trading this market. It’s provided as a courtesy; showing entries and exits as the trade, LABD-22-03, unfolds (not advice, not a recommendation).

The expectation is for price action to allow the position to be increased based on more biotech downside.

With the Fed meeting due up this week, it’s going to be interesting.

Stay Tuned

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.

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


Biotech … ‘Brace for Impact’

Downside Leader

From the outset of the bull market’s end, biotech has been the downside leader.

Of the two indices being tracked, IBB and SPBIO, the latter of the two, is the weakest.

Over the past several weeks, it’s been like a terrier on a mailman’s leg concerning positioning short this index (not advice, not a recommendation).

In the end (as we’ll see below), it turns out that waiting for an actual penetration, print, and close above resistance, was the best approach.

Now, it’s obvious, we’re in a reversal.

The unfortunate part from an economic standpoint, this could be the next big leg lower.

Biotech SPBIO, Daily Close

Penetration and close above resistance (blue line).

Then, price action retreats below resistance and back into the trading range; Wyckoff, Up-Thrust (reversal).

It’s important to note, if SPBIO closes at this level or lower, the prior analysis of ‘grinding to a halt‘ on a weekly close basis, remains valid.

Positioning

Right or wrong, the short position LABD-22-03, was never fully exited (not advice, not a recommendation).

Everyone has their own style.

From a personal standpoint, I despise ‘chasing’ the market. Chasing is for the lazy or frightened who are too afraid to pull the trigger. No thank you.

In fact, the LABD-22-03, position was increased near the end of yesterday’s session.

The intuition, the gut feel, if you will, was ‘This sector’s going to reverse. When it does, it’s going to reverse hard’.

With today’s pre-market action (about fifteen minutes before the open), LABD, trading higher by 3.10-points, or +6.35%, that intuitive assessment is proving correct.

At this point, an obvious stop level would be yesterday’s LABD, low @ 45.77

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

Miner Reversal … 7-Weeks Later

Strategy Update … GDXJ

Wyckoff and Fibonacci analysis allowed the reversal of gold miners GDXJ, to be identified to the week and then, to the day.

A quick review of this post, is the reversal on a weekly basis and this one is a follow-up, showing Fibonacci correlation on a daily basis.

If we want to go way-back, this report, shows the miners were not in a bull market and have not been for some time; for years, actually.

That does not mean there were no trades for upside or downside; there were.

However, from a strategy standpoint, gold miners are not bullish.

So, let’s look at the Junior Miners GDXJ, as it’s the weakest in the sector.

Junior Miners GDXJ, Weekly Chart

Un-marked

First Mark-up

The reversal is at Fibonacci 89-weeks, plus one day.

However, it’s the next chart that’s more disconcerting for the bulls.

Price action reversed right at a Fibonacci 23.6%, retrace; indicating severe weakness (if it holds).

The two black lines above the 23.6%, are 38.2%, and 50%, respectively.

The next chart zooms into the reversal area.

This week has already posted a new weekly low, providing additional confirmation of the reversal.

As gold, silver and the associated miners reverse lower, we have news reports of precious metals purchases going off the charts.

Where was everybody in 2001, as gold was bottoming?

That’s, 2001 – to – 2022, a Fibonacci, 21-years.

Which brings us to the next point.

The YouTube “Herd”, is Forming

Several YouTube sites that have been monitored for years, have recently blown-up, passing 100,000 subscribers; more than a few are past 200,000 or higher.

Recently, they have started giving each other ‘shout-outs’, to indicate their approval of that particular site’s ‘content’.

Viewer, Beware

By definition, the ‘herd’, does not have the right answer.

Each one is now monitoring what the other one is doing; they are all, influencing themselves.

The only way to have a hope of getting unique insight is to remain aloof. Wyckoff described this exact phenomenon in his autobiography.

He had very wealthy clients that wanted to get closer (unlimited) access to him. To this overture, he refused.

He isolated himself and remained cloistered.

Summary

Thus far, the analysis of gold ‘changing hands‘ remains intact. Gold continues to be well off its highs; silver is not anywhere close.

Strategy, Tactics, and Focus.

The Junior Miner’s reversal can’t be disputed … there it is.

If precious metals and the miners are not responding to all the ‘money printing;’, then something else’s afoot that’s not being revealed to us in the proletariat.

That ‘something’, is probably starvation … which gets us back to Genesis 41; corn and grain come first, then gold and silver (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

Biotech … ‘Hold the Phone’

Danger Point … Print, Danger Point … Close

First, biotech SPBIO, ‘printed’ into the danger point.

The next day (yesterday), it ‘closed’ into the same region.

The charts below show where things left off at that close.

As is frequently done, farther down, we’re going to invert the chart to show price action similar to the leveraged inverse fund LABD.

Biotech SPBIO ($SPSIBI) Daily Close

Adding zoom for more detail

Next, we invert the same chart to show how it looks going short via LABD (not advice, not a recommendation).

Biotech SPBIO ($SPSIBI) Daily Close … Inverted

We can see that price action has been in a similar set-up before; just prior to a significant decline (non-inverted).

Summary

Obviously, Monday’s print into the danger point was taken as the set-up for a reversal. That reversal appeared to be taking hold based on that day’s price action.

Yesterday, reversed the reversal but then wound-up printing and closing into a danger point; an up-thrust condition on the standard chart and a spring condition when looking at it on the inverted scale.

Positioning

As was done in prior action, the position size in LABD, was reduced as price retreated (not advice, not a recommendation).

However, the position was not exited entirely.

Pre-market action has LABD, trading higher about 1-point or 2.0%. This behavior is consistent with a potential reversal.

Today’s close is the important part.

Higher for LABD, and we’re in a potential reversal for a significant move; lower and it’s time to exit completely and stand aside (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

Biotech Strategy … Going Forward

SPBIO, Correction Complete

This morning’s action in biotech SPBIO, indicates we’re done with the upward corrective move.

The prior short position LABD-22-02, was reduced throughout the downward push over the past week and then exited completely in this morning’s pre-market session.

Within minutes after the open, as LABD pushed lower (SPBIO higher), it became obvious, a significant reversal was at hand.

It took LABD, just a little over two minutes to clear out stops and then begin an upside reversal.

Amateur vs. Professional

Dr. Alexander Elder covers the amateur/professional difference in his book Come Into My Trading Room.

That is, if an amateur gets stopped out or exits with a loss, they never come back.

Even if the trade reverses to go their direction, they refuse to re-position … having been ‘spanked’ by the market.

Breaking free of the (engineering) perfectionist mindset, is just one challenge during the journey to professional.

It must be overcome to achieve sucess in the markets.

Re-Positioned, Short

All of the above to say, the short in biotech has been re-established: LABD-22-03 (not advice, not a recommendation).

The difference at this point is, there’s a high level of expectation on what’s likely to happen next.

As Wyckoff put it a century ago, the reversal and re-position, enables us to be ‘in tune’ with price action.

Biotech SPBIO, Weekly

We’re going to invert the chart and mark it up.

First off, we can see the rule of alternation at work.

Next, we have at least two potential trading channels.

This one …

And this one …

We’ll let price action itself define which one (or none) is in-effect.

When we get a corrective move that resolves itself, at times, it creates a pivot point with a different rate of advance or decline.

That means, there’s more than a good possibility, the second (more aggressive) channel, is now dominant.

Summary

As this trade progresses, we’ll cover potential areas where the existing position can be increased with as low risk as possible.

As this juncture, LABD is trading in the area of 55.25.

The early (pre-market) loss has been more than recovered and we’re now well in the green for the day.

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 … Grinds To A Halt

‘Two Weeks, To Flatten The Curve’

On a weekly closing basis (as we’ll see below), it’s obvious.

Upward (net) progress in biotech SPBIO, has come to a standstill.

While the media continues to foment the lie that somehow interest rates have reached their limit, or ‘Da Fed’, is going to do this or that, behind the scenes the plan … set out years ago, continues to unfold.

Before we get to the charts, let’s not forget what’s happening ‘out there‘. The number of idiots seems to be increasing without bound.

As Goethe said way back in 1826, ‘There is nothing more frightful than ignorance in action’. He was being polite with the ‘ignorance’ part.

Now, on to the charts.

The un-marked, chart of biotech SPBIO, is below.

The second chart zooms-in, showing the percentage changes on a closing basis.

Biotech SPBIO, Weekly

Zoom in, showing net progress.

One would think, since biotech has dropped so significantly, there’s no more (downside) left.

Certainly, anything can happen.

However, the premise is, the overall collapse is still in the early stages.

We have not (yet) had a 50% – 90%, drop in the S&P.

In addition, pension funds are likely to go broke.

So all those $250,000/year ‘retired’ lifeguards that J.B. has spoken about? Well, how do you leverage that ‘skill’ to another industry?

SPBIO, Inverted

Next up, the inverted chart of SPBIO, to mimic the action seen in leveraged inverse, LABD.

Then after that, is the same chart marked with a potential forecast of where price action may be heading (not advice, not a recommendation).

Now, the markup showing potential action should biotech continue its decline.

Zooming in on the last few weeks of action.

The fact price action has bounced from this area of the chart, tells us the trading range is valid; the blue line is being recognized by the market.

Now as shown, we’ve come to a halt.

So, what happens next?

Positioning

As SPBIO ground its way higher (LABD lower) over the past week, the short position, LABD-22-02, was reduced further but not eliminated (not advice, not a recommendation).

Since there’s no more net progress upward and we’re still in an overall downtrend, expectations are for biotech to either stall, or reverse, continuing its trend lower.

As stated previously in this post, the market’s prior congestion was ‘complex’.

So, we’re expecting ‘simple’ this time around; all of which lends support to more downside.

Stay Tuned

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.

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

Biotech … The Case For Collapse

Down 90%, Before October ?

If all the “Ifs”, come true.

First off, biotech (SPBIO), may already be in a collapse.

Of all the major sectors, it’s leading the way lower; down -61%, from all-time highs, set in February of 2021.

With SPBIO, lower by that much, are there still downside opportunities?

Only you can be the final judge of that.

However, for my firm, I’m not waiting around to see what happens next; we’re already short (not advice, not a recommendation)

SPBIO, Summary

As we’ll show below, SPBIO’s maintaining price action in a downside channel, declining at approximately -97.8%, on an annualized basis.

If that channel is held for the next three months (a big if) and if there’s no ban on short sales (as happened last time in 2008), and if the vehicle itself (LABD) remains viable, we can look for a -90%, decline from all-time highs, by October at the latest.

Why -90% ?

We’re using our chief, cook, and oh so, ‘disruptive’ bottle-washer, Carvana (CVNA) as the example.

The last report on Carvana, highlighted the possibility that it’s ripe for implosion.

The very next session, that implosion started in earnest.

Currently trading at 26.53, CVNA is down -92.96%, from all-time highs.

So, -90% (or more), for biotech seems reasonable 🙂

Throwing in a couple of anecdotal comments from J.B., Dan, and Patera, and voila! ‘This sucker could go down.’

Moving on to the main topic.

Biotech SPBIO, Weekly

Here’s where we are with the un-marked chart.

We’re going to compress the chart and put in the channel lines. The lower horizontal line marks a decline of -90%, from all-time highs.

If price action maintains the right-side trend line, a 90% decline, targets right around October this year.

Summary

This analysis could be blown away, rendered invalid, at the very next session.

That’s the way of the markets.

As sated, current positioning is to be short the sector via LABD, with trade LABD-22-02 (not advice, not a recommendation).

As a result of today’s action thus far, we’ve got a hard stop for LABD, currently @ 55.73.

Even as this post is being created, SPBIO action continues to grind down; threatening to post a new weekly low.

Stay Tuned

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.

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