Monthly Archives: August 2024

Oil … Where’s The Bounce?

August 21, 2024 By in DRIP, DRIP-24-02, Great Depression 2.0, Oil, Oil & Gas, USO, XOP, ZeroHedge 1 Comment

Not Happening

There’s no oil bounce.

Not happening (not yet anyway).

Instead, oil looks like it’s heading off a cliff.

Weren’t we supposed be forming some kind of ‘tradable bottom’ because the sellers were accumulating?

That kind of bottom-think may have worked under more ‘normal’ conditions.

However, it should be obvious to all (with some still clueless), we’re not in normal conditions.

Hedge funds dumping oil, giving a heads-up, demand collapse is either coming or is already here.

Great Depression 2.0

Presented many times on this site (click sidebar ‘Great Depression 2.0’, for a list of posts) that we’ve likely gone straight past ‘recession’, into depression (not advice, not a recommendation).

If that’s even remotely true, we should see demand collapse in heavy duty areas of the economy like trucking, right along with job implosions.

Oh, wait, here it is … and here it is, again. 🙂

Back to the oil patch. Let’s include exploration and production (XOP) posting lower as well.

Oil & Gas: Exploration, Production, XOP, Daily Close

The last position short XOP, via DRIP was stopped-out for a minimal -1.24%, loss.

Re-positioned via DRIP during yesterday’s session (not advice, not a recommendation).

Trade labeled as DRIP-24-02.

The purpose of the prior channel notation is to show, XOP will at times exhibit channel (trending) behavior.

There’s only one right side (verified) contact on the latest channel, the magenta arrow.

However, the overnight market (10:57 p.m., EST) has oil futures continuing lower.

The expectation is for some follow through (downward) on the XOP, at the next session (not advice not a recommendation).

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

Russell 2000, Search for ‘Danger’

August 19, 2024 By in David Weis, DRV, DRV-24-03, IWM, IYR, Real Estate, Russell 2000, TZA, TZA-24-01, Wyckoff

Testing at The Axis

At this juncture, Russell 2000, IWM is not only looking for The Danger Point®, but at the close of this session, it’s there.

While everyone else is breathlessly calling the ‘end of the correction’, we’re working the market from a strictly objective standpoint.

That is, what’s the market saying about itself?

With that, take a look.

Russell 2000, ETF IWM

“What do you see?”

Well, it appears that we’re at the point where it can go either way.

It’s as if the ‘weight of a feather’ could move the market (Wyckoff, 1910).

Positioning

From a positioning standpoint, this is where the risk is least for a short position (not advice, not a recommendation).

Low risk does not mean no risk. It just means a potential inflection point.

Housekeeping

As stated in this update, the short trade via DRV, had a tight stop. That position was exited early in the session with a ding (loss) of about 4%.

Moving on to the market at hand.

David Weis mentored his students to look for trades at the ‘edge of the lake’.

We’re there with the price action of IWM. Several attempts (up to a point) to position short are to be expected (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

Carvana’s ‘Short Squeeze’ Race

August 18, 2024 By in Car Questions Answered, CVNA

Ever Higher

Is this a ‘race to the finish’ on the squeeze?

According to Big Charts, CVNA short interest has dropped over the past few months from about 32%, shares-short, to about 13%, today.

The last update identified an earnings release precipitated up-thrust (which it was).

That condition only lasted for a few days before going on to post a new (recovery) high this past Friday.

Carvana CVNA, Weekly

Retrace levels are shown.

Fibonacci 50%, in the vicinity of CVNA, 192.

Right now, CVNA is still at the 38% level, closing last Friday’s session near the day’s high.

Disregarding ‘interesting’ numbers, getting back to reality, here’s a ‘boots on the ground’ assessment of the car market, link here.

So, with all this Carvana excitement, you have to ask yourself, ‘Do you feel lucky?’

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

Bonds In Trouble … Rates Higher?

August 17, 2024 By in Bonds, David Weis, Federal Reserve, Interest Rates, TLT, Uneducated Economist, Wyckoff

The Water’s Fine, Come On In

The financial press and their lackeys, expects the Fed to pull a rabbit out of a hat and lower rates.

The public’s perception seems to be:

‘Happy days are here again’, if rates get lowered, I’ll spend and spend. I can’t help myself, there is no end. So, get rates lowered, again.

Wyckoff warned about the financial press over a century ago. Since then, not much has changed.

In fact, it’s probably worse.

The public thinks rates are coming down. It’s the ‘credible threat’ as Uneducated Economist puts it. The Fed ‘threatens’ to lower rates, and it ‘happens’, sort of.

Actually, rates aren’t lower, but the market has distorted itself, as if they were.

So, let’s get past the narratives and go straight to the truth, price action in the bond market.

Long Bonds, TLT, Weekly Close

As my mentor Daivd Weis used to say: “What do you see?”

I’ve already marked-up the chart and I see one Wyckoff Up-Thrust, reversal, after another (not advice, not a recommendation).

That, along with exhaustion spikes in Force Index, at or near significant reversals.

The ‘Scary’ Part

Wyckoff analysis is not only price action, it’s volume as well.

Look at the volume in TLT, over the past year.

Massive inflow and what has price done? It’s gone essentially nowhere.

Wyckoff called this ‘Effort vs. Reward’. Lots of effort with little (net) reward.

Add to that, a potential exhaustion spike in Force Index (far right side, purple circle).

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

Update: Ins & Outs

August 16, 2024 By in $SPSIBI, Biotech, DRV, DRV-24-03, IYR, LABD, LABD-24-17, Real Estate, SPBIO, Wyckoff 1 Comment

Biotech and Real Estate

Those monitoring this site are witnessing the search (for the short entry) in real time.

As said in the prior update, just because Fibonacci lines up, both in time and distance, does not guarantee anything.

From a Wyckoff perspective, as a result of Wednesday’s XBI price action penetrating the prior days’ low, and then stopping dead, there was a probability of a (minor) spring … which we got the very next day.

By the way, that upward move (yesterday) carried the XBI, near another Fibonacci retrace level: 61.8%.

As a result, the LABD-24-17, was exited with about a 3.6% loss (not advice, not a recommendation).

Now, on to the action at hand.

Real Estate IYR, Daily

Depending how price action progresses, we’ll go into more detail on the technical condition.

Today printed a new daily low and we have an MACD (bearish) crossover still in effect.

Trade action was to go short via DRV with a representative stop (for DRV) one tick above the IYR high: 95.96 (not advice, not a recommendation).

Admittedly, it’s a tight stop and that’s the point.

If IYR turns and starts to exhibit buoyancy, we don’t want to hang around.

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 … Target & Reversal

August 14, 2024 By in $SPSIBI, Biotech, LABD, LABD-24-17, SPBIO, XBI 1 Comment

Right On Schedule

Biotech XBI, meets target: Check

Biotech XBI, Fibonacci Day 8: Check

Biotech XBI, 50% Fib Retrace: Check

Biotech Fib 1-to-1 Projection: Check

Biotech XBI, New Daily Low: Check

Biotech about to ‘Hit the fan’: Check 🙂

Well, obviously the last bullet item is ‘not advice, not a recommendation’.

However, one can’t deny that all of the above bullet items (save the last) concerning price action have been met.

Fibonacci Retrace & Projection

Moving on to the chart, we have the XBI daily, with two Fibonacci overlays.

The first, is the typical retrace from high to lows; the second is a projection from the ‘a-b-c’ correction (a-b-c, labels not shown).

Biotech XBI, Daily with Fibonacci

Admittedly, it’s a busy chart.

The attempt here, is to show a ‘confluence of events’.

We’re meeting Fibonacci time sequence and two Fibonacci price action levels, simultaneously.

Obviously, that does not guarantee anything.

What is does do, is show we’re at a point where probabilities have lined up for a reversal (not advice, not a recommendation).

Positioning

As can be inferred from the sidebar a short has been opened: LABD-24-17, with stop level tentatively set at the LABD daily low for the session (not advice, not 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

Bonds, Oil & The Squeeze

August 13, 2024 By in Bonds, DRIP, DRIP-24-01, Oil, Oil & Gas, TLT, USO, Wyckoff, XOP, ZeroHedge

Bond Market Model?

According to this just out from our financial press, hedge fund managers have reduced holdings of Brent crude futures to ‘lowest levels on record’.

That condition supposes some kind of bullish bias and potential upside reversal.

Never mind the chart only goes back to 2011.

So, it’s really ‘the lowest in thirteen years’.

That’s hardly the hundred years or so, one would infer without digging deeper.

The Bond Model

Let’s not forget, bonds had a similar ‘maximum short‘ condition back in 2020.

Back then (like now), the ‘max-short’ was supposed to result in some kind of history making squeeze.

The result? It never happened.

Instead, bonds collapsed, rates launched higher and here we are today.

With that, let’s look at oil proxy, USO.

U.S. Oil Fund, USO, Daily

As of today’s action, it’s not looking too good for the bulls (not advice, not a recommendation).

It’s somewhat self-explanatory.

Price action is in Wyckoff ‘up-thrust’ position and with today’s reversal, appears to be confirming (not advice, not a recommendation).

As the earlier post stated, I’m already short the sector, DRIP-24-01, with a definitive stop defined as yesterday’s XOP high (not advice, not a recommendation).

If the ‘max short’ for oil really is the pre-cursor to an upward squeeze, we may be about to find out very soon.

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

‘Right’ & ‘Wrong’ Answers

August 13, 2024 By in DRIP, DRIP-24-01, DRV, DRV-24-02, IYR, Oil & Gas, Real Estate, Wyckoff, XOP 2 Comments

Lead By Example

Every day, the tape prints one more clue to the next probable direction.

The next probable direction.

Part of an experienced speculator’s pre-market prep is to know from the prior session, the ‘correct’ answer for the current session.

That is, if a set-up has materialized, then subsequent price action will have a specific or variation of a specific pattern.

If the pattern posts on the tape, we have the ‘right’ answer. If not, probabilities are saying ‘no’ at this point.

Of course, the hard part and according to Wyckoff, it laterally takes many years of observing and working with price action to know what to expect.

Real Estate, ‘Wrong’

This morning’s session in real estate, IYR did not post the ‘right’ answer from a short standpoint. A lower open and lower print was the expectation.

Therefore, DRV-24-02, was exited with just over a 2%, loss (not advice, not a recommendation).

However, oil and gas XOP, gave the ‘right’ answer.

Oil & Gas XOP, Daily

The circled price action is what we’re looking for (not advice, not a recommendation).

There’s a lot going on with this chart.

If XOP continues lower and short, DRIP-24-01, is not stopped out or exited, we’ll re-visit this action with further updates (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 herexop

Real Estate … Tops-Out?

August 12, 2024 By in Dr. Elder, DRV, DRV-24-02, FAZ, FAZ-24-01, Financial Sector, IYR, Real Estate, XLF, ZeroHedge

Series of Lower Highs

Real estate may have been held up by the expectation of lower rates.

With those rates, it’s been on-again, off-again, then back on again, only to go back off again.

Let’s not forget the real possibility, the entire dataset (employment, jobless claims et al.) could be fake. 🙂

So, it’s a good thing with Wyckoff, we’re not looking at so-called ‘data’ but the truth; the price action itself.

Real Estate IYR, Daily

We’ve got a series of lower highs.

No doubt, the price action is very subtle … slowing eroding away without much fanfare.

With this morning’s session, we have a new daily low.

If short, a good place for a stop would be yesterday’s high (not advice, not a recommendation).

Housekeeping.

From the last post on XLF, today’s session has essentially been a combination of the two scenarios.

As a result (and according to the trading plan), the short FAZ-24-01, was closed with a marginal profit of 0.62%.

The sector may still go into a sustained decline. However, it did not perform to expectations and therefore, exited.

As Elder said years ago, ‘when in doubt get out.’

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

When To Go ‘Short’

August 11, 2024 By in Ed Dowd, FAZ, FAZ-24-01, Financial Sector, Kitco News, XLF 1 Comment

Buy or Sell at The Danger Point®

While the financial press (pictured at left) is fumbling around, trying to figure out if the market’s up or down, for this site it’s not about ‘up’ or ‘down’, but what the market itself is telling us.

Case in point, this past week.

Remember, at the beginning of the week, major brokers blew-up and locked up.

You couldn’t log-on whether long or short.

Surprising Speed

Posts on this site gave numerous clues (prior to last Monday), that we’re at risk of a downturn.

Two examples of potential downside were August 1st, Carvana’s ‘Interesting’ Numbers, posted here; the next day, Correction … or … Crash? posted here.

All released well before the Monday, August 5th, wipeout.

One thing to note as Ed Dowd points out (link here) is the speed of the downdraft.

Was this past Monday’s market action (and brokerage blow-ups) part of the new paradigm, the new normal?

With that, let’s take a look at what’s likely to happen (or set-up), next. The last post showed a potential short sale set-up (not advice, not a recommendation).

Finance Sector XLF, Daily

If price action continues higher, shown as the inserted back bar, the plan is to stand aside or exit, if short (not advice, not a recommendation).

Next, if we get downward action posting a new daily low, shown as the magenta bar, that’s a potential short entry (not advice, not a recommendation).

Of course, not shown is the scenario where the market does nothing and remains flat.

Based on last week’s hysteria and this additional update from Ed Dowd, link here, markets doing nothing seems to be the least likely outcome.

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