Mid-Air
This could be all there is for the SOXX.
If price action can’t continue higher from here, we could have a significant reversal (not advice, not a recommendation).
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The Danger Point®, trade mark: No. 6,505,279
Next Leg Lower
Unfortunately, the (mad scientist) graphic at left, is not too far removed from what’s really going on in biotech.
While the S&P, Nasdaq Qs, Gold Miners, Semiconductors, Financials, The HOOD, ORCL, and others, continue to make all-time highs, conspicuously absent is biotech, XBI and IBB.
Now, it appears that quietly, in the background, XBI is reversing to the downside.
Biotech XBI, Daily Close
The up-thrust is there, but is a weak penetration of resistance.
Even so, on the ‘test’, volume contracted by -49.24%, when compared to volume on the upside penetration.
Until proven otherwise, this set-up appears to (currently) be the best short opportunity.
With that said, all other short positions have been closed to focus on biotech.
Leveraged inverse fund LABD is being used at this juncture: Trade LABD-25-10, with stop at the session low (not advice, not a reocmmendiaton).
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The Danger Point®, trade mark: No. 6,505,279
The Real Story
If there’s any one interview that details what’s really going on, it’s this, link here.
The 48-mintue Kitco session with Bert Dohmen, is much needed straight talk.
It’s all there:
Official data is fake. Markets will (likely) ‘trap’ bulls with massive gap-down. It’s 1929 (again). Crypto is an illusion. Silver/Gold will correct (temporarily) along with the markets. We’re surrounded by bought off media. The population (masses) don’t think or can’t think.
Adding to that are ideas and sources discussed for years on this site, like ShadowStats having ‘real’ data on unemployment and inflation.
The list goes on.
With all that said, let’s look at one of the sectors (retail brokers), that could be hit hard during a surprise downturn.
Robinhood HOOD, Daily
It’s important to note, price action late Friday, began to pull away from the lows … rising into the close.
Just after that close, the announcement, HOOD made it to the S&P.
Wyckoff said a century ago:
‘Somebody always knows something. That ‘something’ shows up on the tape’
Well, there it is.
Was yesterday (the start of) a blow-off?
Froce Index (thrust) was the largest since the IPO, trading on August 4th, of 2021.
Price action is currently (as of 11:58 a.m., EST) retreating off the highs.
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The Danger Point®, trade mark: No. 6,505,279
Well, Except for HOOD
Long bonds TLT, have launched higher four consecutive sessions; yields lower.
Two major brokers, Schwab and Interactive, appear to have tested (or, are testing) their Friday breakdown.
Robinhood bucked the trend, closing at all-time highs.
That puts HOOD, in potential Wyckoff ‘up-thrust’ (reversal) position (not advice, not a recommendation).
Note: The S&P did not post new highs. Last Friday’s all-time high, remains intact.
Charts to follow.
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The Danger Point®, trade mark: No. 6,505,279
Canary in The Coal Mine?
Friday’s downside action hit retail brokerages hard:
Schwab (SCHW) down -5.72%
Interactive Brokers (IBKR) down -6.41%
Interestingly, Robinhood, poster-boy for the novice ‘investor’, was whacked early in the session but recovered, closing lower by only -1.61%.
Adding to that, is the table below.
Financial Services, Capital Markets
This is part of the Finacial Services sector, showing major brokerage firm’s trading last Friday.
The upside in after-hours for HOOD, was the announcement it’s being included in the S&P 500.
If you have been in this game long enough, ‘last gasp’ indications like this, are typically contrary indicators (not advice, not a recommendation).
Note: The S&P reached its all-time high on Friday
Watch to see what happens next.
Does HOOD hold the upside (starting tonight), and move higher, or does it start slipping away.
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The Danger Point®, trade mark: No. 6,505,279
Along With, ‘Throw-Over’
Once again, we’re at the edge of the (price action) lake where the risk of being wrong, is least.
Delta’s at the extreme, contacting the terminating wedge, then backing off, returning into the pattern.
As action progressed higher from April lows, the amount of thrust (Force-Index) continues to erode.
Delta DAL, Weekly
Now that (nearly) everyone’s got what they wanted, higher unemployment, so rates can be lowered, the show’s about to start.
The ‘hand-wringing’ has already begun, link here and here.
Two sectors typically hit hard during an economic downturn, are semiconductors and aviation (not advice, not a recommendation).
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The Danger Point®, trade mark: No. 6,505,279
Big Reversal?
It was a very busy Friday, hence the reason for the late update.
One short position closed (SOXS-25-10) and five more opened.
Cisco Systems was one of those five (not advice, not a recommendation).
Earnings for CSCO, were released in mid-august; market reaction was a swift move lower.
From the earnings, everything seems to be good.
However, at this juncture, that’s not what the market is saying (at least for now).
Cisco Systems CSCO, Daily
Note:
As a general rule (for my firm), on any initial position, the implied stop for that position is that day’s session high or low depending on long or short.
In the case above, that means a ‘buy-to-cover’ stop at the day’s high of CSCO 68.10 (not advice, not a recommendation).
Other (short) positions to be reviewed over the weekend.
Stay Tuned
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The Danger Point®, trade mark: No. 6,505,279
Watch for Tomorrow
As of this post (6:41 p.m., EST), Broadcom (AVGO) is trading up about 11.50-pts at 317.6, after its earnings release, link here.
That level is just above the all-time (regular session) high of 317.35, posted on August 13th.
In the SOXX, Broadcom is No.2, market cap, right behind Nvidia. So, the SOXX, is up as well in the after-hours.
It’s interesting to note that sister-stock, Nvidia has not rallied in sympathy.
In fact, it’s trading slightly lower after-hours.
As the tagline says, we’ll be watching closely tomorrow.
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The Danger Point®, trade mark: No. 6,505,279
… And The Hard Place
As the chart shows, the SOXX has been struggling for weeks in the resistance zone.
From that chart, one question to be asked, did the overnight and early session fill the gap?
The other question, did the Nvidia earnings release change the dynamic of the sector?
Reading price action since then, in real time, the answer seems to be yes (not advice, not a recommendation).
Semiconductors SOXX, Weekly
As of this post (10:35, a.m., EST), the SOXX is struggling to post higher … but it’s not happening.
There’s a lot of congestion around the resistance zone. In Wyckoff terms, he calls this price action ‘Cause’.
Meaning, that if we break materially lower from here, it’s called ‘Effect’.
His point being, since there’s sufficient cause for a sustained move, if/when it happens, we’re to expect a corresponding effect (not advice, not a recommendation).
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The Danger Point®, trade mark: No. 6,505,279
Throw-Over?
When looking at the chart of Junior Miners, GDXJ, it’s possible we could be in the midst of a massive terminating wedge ‘throw-over’ (not advice, not a recommendation).
We’re about an hour before the close; GDXJ, price action is beginning to retreat off its session highs.
Junior Miners, GDXJ, Weekly
Upward thrust (Force) is dissipating.
If action enters back into the wedge pattern, it’s typically viewed as a sell, or sell short signal (not advice, not a recommendation).
Stay Tuned
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The Danger Point®, trade mark: No. 6,505,279
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