So, Now It Starts

It’s like the knight in Monty Python.

We have the usual suspects being rolled out to let us know, there’s nothing to worry about.

Links here, here and here.

This one, is especially ripe.

Watch until the end (if you can stomach it) where the host asks in exasperation, after a 200% gain in NVDA, ‘is there really more upside?’

At this point (as of 11:05 a.m., EST), the answer is no.

Forces Of Thier Own

All the way back in 1902, Wyckoff discovered after studying the tape (the Ticker):

‘Forces were at work, moving prices, that had no connection to real values.’

That, ladies and gentlemen, is all you need to know.

Fundamentals are just a well-orchestrated ruse to keep the public thinking, if their pencil’s sharper than the next guy’s (think FactSet), they’ll have the market figured out.

Wyckoff ‘Nails It’

So, he we are.

Using Wyckoff analysis (reading the tape) the probability for the current reversal, was identified within a day.

The subsequent short position (via SOXS) was stopped out yesterday, almost lost completely, but for the re-entry @ SOXS 9.70 (not advice, not a recommendation).

As of this post, we’re a full point higher at 10.70, an 11%, gain in just hours … not bad.

With that said, we’ll shift gears a bit and go straight to the leveraged inverse fund SOXS, but use a 3-Day chart.

Semiconductors Leveraged Inverse SOXS, 3-Day

The 3-Day, is being used as the market itself has defined (for now) it shows price action characteristics more clearly.

Distance between the entry and the stop is 0.28-pts.

As a position size example:

Risking $1,000 on the trade would result in a size of 3,571-shares of SOXS (not advice, not a recommendation).

For more information on sizing, see Van Tharp, link here.

Note: There’s a big price difference (over 450%) between the Wycoff text and the Van Tharp text … just sayin’.

Next Steps

At this point, there’s not much to do on this trade (not advice, not a recommendation).

Keep in mind we’re at an historic bubble extreme, the likes of which has not been seen since Sir Issac Newton lost his fortune over 300 years ago.

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