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.
‘Professionals don’t look for the challenge, they look for the money’, Dr. Alexander Elder
Right now, the ‘challenge’ is AI; bull or bear, who’s right?
We even have a bearish article out on SeekingAlpha. That means, the sector will probability go higher from here. 🙂
I wrote for SeekingAlpha years ago; had tens-of-thousands of views on my work; was somehow, never paid a dime.
The editors eventually told me, identifying potential market turns to-the-day, was “not suitable” (that’s a real quote) for their readers … so, there’s that.
Follow The (Nat-Gas) Money
Meanwhile, a potential significant reversal was identified in Nat-Gas, link here. So far, it’s progressing under the radar.
Entries have been made in UNG, at 6.64, 6.75, 6.86, 6.89, with a hard stop moved up to UNG 6.71 (not advice, not a recommendation).
Next, we have a potential reversal in Real Estate.
Real Estate IYR, Daily
Price action’s now at Fibonacci Day 8, from the low on August 21st. In addition, it’s at the 50%, retrace level from the high on July 27, to the aforementioned low.
We’re in a high, potentially, soon to be much higher, interest rate environment.
The (Interest Rate) Black Swan
The general public and investing professionals alike, think as the economy tanks, the Fed will lower rates.
It’s a widely and strongly held belief. After all, it’s always worked that way.
What if it doesn’t happen this time.
The economy tanks and rates move even higher?
it’s a possibility to consider.
Positioning
As one might guess, I’m already short this sector via DRV (not advice, not a recommendation).
Entries were made yesterday and today at DRV 48.42, and 47.66 respectively.
Hard Stop, is at the session low of DRV 47.00 (not advice, not a recommendation).
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.
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 mainstream has run out of hype; at least for now.
Their AI mania narrative and price action blew up yesterday.
The probability for a blow-up was identified ahead of time, here.
Who knows how many retail investors bought in, now, left holding the bag.
The more probable (overall market) outcome at this point, is sustained, persistent, downside … possibly for years if not decades (not advice, not a recommendation).
However, not every market is going to go straight down. Some, might actually go higher.
Natural Gas & The ‘Disruption’ Trade
One of those upside probabilities highlighted in this update was Nat-Gas.
From that update we have:
“If UNG, heads lower yet again, it could be the last straw for the weak bulls, causing them to close out.”
Nine trading days later, that’s exactly what happened.
The original chart of UNG, has been updated to show subsequent price action.
Natural Gas UNG, Daily
When price action penetrated support (lower blue line), it puts UNG at The Danger Point®
This is where the risk of being wrong for a long position is least (not advice, not a recommendation).
Positioning
Taking the above into account, with downside risk potentially minimized, two entries were made during this session (currently, 1:21 p.m., EST).
One at UNG 6.64, and another larger entry at UNG 6.75.
An obvious Hard Stop is yesterday’s low of UNG 6.49, with a Soft Stop (trader discretion) at today’s low of UNG 6.63 (not advice, not a recommendation).
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.
Yes … anything can happen but what’s the most likely thing?
At this juncture, based on price action so far (as of 11:38 a.m., EST), the SOXX looks like it will penetrate the blue line resistance tomorrow or the day after (not advice, not a recommendation).
That penetration should it happen, will set-up a potential reversal (Wyckoff up-thrust) condition.
Exactly how that action will take place is unknown. Nvidia (NVDA) is scheduled to release earnings tomorrow after the close.
Semiconductor SOXX, Daily
The chart shows a potential target area.
The target is right in the vicinity of a 50%, retrace from the reversal high (7/31/23), to the low, set last Friday the 18th.
Positioning
Based on the behavior of price action during the last session, it was clear for the short term, higher action in SOXX and lower action in SOXS was probable
With that, even though the stop of SOXS 9.93 was not hit (as it was today), a discretionary exit was made at SOXS 10.51, which yielded about +8.4% on the trade.
Next Steps
On the sidelines for now (not advice, not a recommendation) and watching closely.
It seems the mania has increased all the more even though we’re past the top on the SOXX.
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.
At this point, market bulls have to be just a little bit nervous.
Is the reversal from Friday, going to hold into next week or was it just a blip on the way to much lower levels?
Can a ‘Once in 300-years mania’, affect us here and now. Is that knowledge useful for day-to-day decisions?
One way to answer is to place that fact in the ‘fundamentals’ category; knowing it’s there but stay absolutely focused on the immediate truth, that is, ‘price action’.
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.
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.
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.
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.
From the article, looks like I wasn’t the only one figuring on some type of semi-permanent, supply hit.
If everybody’s ready for it … it won’t happen at all or not when it’s expected to happen.
If there’s going to be some type of blow-up and ‘the market’ knows about it, those not part of the club, need to be flushed out.
With that, let’s look at Nat-Gas (UNG), and see if we’re close to a bullish set-up.
Natural Gas UNG, Daily Candle
At this juncture, UNG has reversed below resistance and may be heading back up for a test.
Note the low volume of Friday’s action. There’s not much commitment at this level.
I’ve cut straight to the chase, showing the ‘target’ area where there could be a low-risk long entry if the market gets to that level (not advice not a recommendation).
If UNG, heads lower yet again, it could be the last straw for the weak bulls, causing them to close out.
For a prior example on how ‘targets’ work, reference here and here on gold, GLD.
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® 