September, 1929

The stock market peaked on September 3rd, 1929, the Tuesday after the Labor Day weekend.

Labor Day for 2020, is Monday, September 7th

The bond market has posted a double top and reversed.  Rates are moving up.

Now, the stock market is stretched, extended and rates are rising; similar to August 1987.

Antique-Ticker-borderThe problem is, it’s similar by an order of magnitude or more.

Remember in the most recent downturn, there were trading halts, brokerage server blow-ups and customer accounts going completely off-line.

In that situation, if someone is long and expecting to beat the herd on the way out, good luck.

The firm sponsoring these updates and analysis stopped trading the (equity) long side of the market years ago; recognizing at any moment, the entire system could break-down with any open positions effectively locked.

If there’s another large break with orders, positions, accounts ‘trapped’, for hours or possibly days; who wants to be on the long side of the market?

Random Notes

Notes for the day … not in any particular order.

Lumber futures:   Prices up over 180% in five months.

2020-08-12_11-40-37-notesInterest rates are rising.  10-yr rates up.  Similar set-up as August, 1987?

Frustration with the mindless herd growing.

Biotech testing yesterday’s move lower.

Moderna (MRNA) has formed a wedge and is near a downside breakout.

Drunk and ‘working’ from home.

Internet censorship:  Oppenheimer Ranch Project no longer monetized.

Silver and gold, future test of new lows?  At time stamp 2:58, Sajad hints at same ‘testing the lows’ scenario as was posted with Silver Up, Then Down on July 25th.

 

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.

Downside Leader

Two months ago in this post, the idea was floated that biotech, IBB may be the downside leader.

It certainly didn’t look like it at the time.

Biotech even went on to make a new high … potentially negating the theory.

shutterstock_146355983It’s different now.

After that new high, IBB has reversed and is trending lower.

On the other hand, the overall market, S&P 500, continues its push upward.

It’s within 1% of all time highs.

Pre-market action as of this post, has the S&P opening up about 0.4%, higher … ever closer.

At this juncture, biotech has hinted at downside leadership.  That hint my become a solid fact if and when the S&P has a decisive downside reversal.

 

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.

Silver … Straight Up. Now What?

From bottom to top, silver has exploded over 147%, in less than three months.

In the process, a wide high volume trading range has been created.

So, what happens now?

shutterstock_55919800A likely answer is, go back to silver price action under similar conditions.

That behavior can be summed up as a ‘test’.  It’s the nature of the markets to test wide, high volume, (near vertical) price action.

Just what does test mean?

The financial pundits will typically call this type of action ‘consolidation’, but that’s a misnomer.

A test can pass or fail.  If the silver market retraces from here … or goes a little higher before a retrace, the nature of the retrace price action is important.

Using the SLV chart shown at the bottom of this post, we’ll be looking for how SLV behaves if and when it comes back to the resistance area … which may now be support.

The last update on silver hinted at a potential new low coming some time after the current run.  ‘Some time’, may be months or years.

Let’s step aside briefly and discuss market reality:

Completely contrary to what is espoused in the financial media, money is not ‘at work’ in the markets.  It’s ‘at risk’.

Fotosearch_k0729352Upon entering a position, any position, a tacit agreement has been made by the new entrant and the other participants.

That agreement is to voluntarily walk into what’s essentially the Roman Coliseum.

The longer you’re in the ring, the more chance you have of being gored, mauled, or eaten alive.

So, how does one minimize that risk? 

The answer is (from this firm’s perspective), wait for the set-up, no matter how long and then move quickly.

Here’s a prior update that’s a good example of how a trade opportunity was identified seven months in advance; then executed for a 155%, gain in just five days.

End of digression

As for silver, it looks like time to wait.  Bullish sentiment at this juncture may (if not already) have reached an extreme.  Price action typically reverses at high sentiment levels.

The SLV chart has two prior reversals identified.  Those reversal actions are similar but not exact.  If silver is to re-test the recent lows, we’ll be looking closely at how it behaves as it returns to potential support levels.

2020-08-08_8-01-01-SLV-Weekly-1-bar-notes

 

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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.

Dollar Death, Not Yet

The latest financial fad, the ‘dollar destruction’ narrative, appears to be losing steam … at least for now.

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On the other side of the spectrum are the precious metals markets with their ‘all bets are off’, ‘this is it’, narrative.

Of course, it’s a dog pile of expert opinion on the whys of the dollar destruction.

Why not join nearly everyone else on the #MeToo, fiat currency bandwagon?  A safe bet no doubt; we all know how important it is these days to “stay safe”.

So, what’s really going on?

Since this site follows principles laid down a century ago, by Richard Wyckoff, it’s not important to know the “why”.  That reason changes daily if not minute by minute.  The truth behind the move will eventually come out; long after the trend has reversed.

As trading legend Ed Seykota inferred, if you want to make money, fundamentals are essentially a waste of time.

2020-08-06_17-09-41-UUP-Weekly-Force-Index-notesWhat we see is downward thrust energy on the dollar proxy, UUP is declining.  Downward enthusiasm is waning.

Does that mean go long on the U.S. Dollar?  Well, that’s up to the reader.  What is being presented here, is the latest hysteria is at least slowing down or coming to a pause.

As Jeremia Babe reports at this link, were just one or two innings into the greatest financial collapse of all time.  The dollar may go through wild excursions before potentially coming to its long awaited fiat demise.

 

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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.

Amgen (AMGN) Breaking Down

Amgen’s the heavy hitter, the leader in the biotech sector.  It’s by far the largest cap equity in the IBB, ETF.

Right now, AMGN is pushing down through support; confirming a down trend that essentially started on July 28th, last week.

shutterstock_793257808At this juncture, AMGN price action’s at the danger point. It can go either way with a confluence of orders; buy, sell, and sell-short.

If the trend-line (chart below) is not broken to the upside, AMGN is moving lower at a whopping -90%, on an annualized basis.

As stated, the firm sponsoring this site is heavily short in this sector; increasing the short position on a near daily basis.

Obviously, this is not a recommendation.  We can’t do that as stated in the disclaimer below and here as well.

The inverse fund BIS, that’s being used to position short as with other inverse ETF funds can blow up (or fail) unexpectedly.  We’re well aware and cognizant of the conditions under which that type of anomaly may occur.

At this point, BIS is ‘well behaved’.  However, BIS may be exited at any time and without notice.

By this time it should be quite evident that we (U.S. citizens) and the rest of the world are smack-dab in the biggest, most dangerous farce in world history.

Anyone with two synapses rubbing together can see there is ‘no scientific evidence of anything’, stated at time stamp 9:22, in this link.

2020-08-06_10-40-48-AMGN-Daily-5-bar-notes

If or when the truth-cork finally pops out of the bottle for all to see, it’s too late.  The emperor has no clothes.  That emperor is biotech.

Recognize in the markets, anything can happen.  It’s possible and likely probable another false narrative will be launched to manipulate the weak.  The current narrative is losing effectiveness.  If so, the next one has to be even more outlandish.

Alien invasion anyone?

Back to biotech.  If AMGN breaks its trend to the upside, the reversal scenario is either negated or modified.

Trend-line break or not, there’s a false narrative at play.  Those not able to see and those not willing to take action, risk being swept away with the tide.

 

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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 Hard Road

Positioning short in the biotech sector (IBB) has not been popular or easy.

Mass hysteria, world-wide hysteria has completely overtaken biotech in a (potentially futile) search and reward for ‘the cure’.  More on that farther down.

shutterstock_689080216

Even before the current stampede, biotech was analyzed by David Stockman and his staff, way back in 2015.  He surmised the entire entourage was nothing more than ‘$2-trillion dollars of bottled air’.

So, if that was then, what about now? 

Now, there’s no ‘price discovery’ of any kind in the equity markets.

There hasn’t been any real discovery for decades … going all the way back to the aborted Head & Shoulders pattern from 1998 – 2002.

Remember that?  A floor was mysteriously put in right at the neckline breakdown, (October 2002) so the market could not go through a much needed washout.

That was potentially the start of major manipulation to ever higher levels and ever bigger bubbles.

So, here we are.  As of this post, after two and a half months of topping action, IBB is in a decisive breakdown.  If it closes at current levels (IBB, 133.57) or below, it not only has downside follow-through from last week’s reversal, it will post a monthly reversal bar as well.

What about ‘the cure’?  Won’t that provide massive profits for the corporations implementing ‘the plan’?

The truth is, it’s getting harder to suppress the truth. 

At this juncture, YouTube, Facebook, Bit Chute and others are playing whack-a-mole with the fact that a resolution to the current situation is not only simple, it’s cheap; Exactly the opposite of the ‘desired’ outcome.

On top of that, one has to consider enough of the public has been fleeced and enough money has been made to the upside, that it’s time to position for downside action.

If we’re to get a sustained reversal, expect the usual suspects to appear; namely, news reports, analysis and recommendations that foist reasons why profits may not be as good as expected.

This is the way the game is played. 

Anyone analyzing P/E ratios, sales numbers or any other fundamental as a ‘reason’ for price action, is living in an alternate universe.

Only time will tell if we’re at a major inflection to the downside.  In the meantime the firm sponsoring this site is heavily short the sector via BIS (not a recommendation).

Note:  The current short position can be exited at any time without update or notice.

Inverse funds are tricky. They have a built in downside (price) bias resulting from expenses maintaining the fund.  They literally can blow-up at any time during an adverse move as was seen with inverse funds DUST and JDST (late March ’20).

These vehicles are absolutely not suited for the ‘average investor’ and even the professional can get impaled on a blow-up every now and then.

 

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.

Biotech Breakdown … Test

It’s early in the session and biotech (IBB) is testing its reversal breakdown.

This is typical market behavior and for the astute trader, allows a potential low risk opportunity to the short side.

shutterstock_602951669A test may take a few moments or several days.  The market itself defines the time-frame.

The daily chart (below) of IBB, shows a wedge pattern that encountered a ‘throw-over’ and reversal back into the trading range.

A wedge typically occurs at the end of a long-term move, whether up or down and throw-over with return, is a classic time-tested sell (or sell short) signal.

We’re past that signal and have yet another; the test of the underside wedge.

The initial measured move target is shown which if met, puts IBB below several key support levels that would then become resistance.

2020-07-27_8-44-43-IBB-Daily-3-bar-at-open-notes

Reported over the past couple of months on this site is that we’re looking for a strategic long-term reversal in biotech.

Of course, there’s no guarantee of that reversal. 

Each ‘test’ is an opportunity for price action to fail the set-up.  It’s the way of the markets.

As a result, the professional trader or speculator is in a continual state of discomfort.

That’s probably why, years ago in an interview, Robert Prechter Jr. stated that some of the best traders he knew were former Marines.

Short vehicles for IBB (not a recommendation) are BIS (2X inverse) and LABD (3X inverse) which are two well known funds as well as just shorting the ETF directly.

 

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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.

Silver Up, Then Down

Let’s take a look at silver’s upside breakout.

First off, silver spikes as seen in the chart below, are nothing new.

shutterstock_6325966

Even trading genius Ed Seykota lamented in his interview for Market Wizards (1989) about getting ‘impaled’ on numerous silver spikes.

It’s just the nature of the very thin market.

For example, as of this post, there are 176,008 silver futures contracts active (Open Interest) out to January 2021.

That compares to 835,037 active gold futures contracts for approximately the same time-frame.

So, at this point, the gold market has over 370% more active futures contracts than silver.  Silver is indeed a thin market; therefore lending itself to radical (spike) moves.

The spike lower in March and then higher over the past week, is quite evident.  However, if we pull out and look at the big picture, there’s trouble ahead for the bulls.

2020-07-25_12-38-36-SLV-Weekly-1-bar-landscape-notes

On the SLV chart is a massive multi-year resistance zone in the 23 – 26, area.

Not only that, it’s a 38.2%, Fibonacci retrace of the entire down move from the top in April of 2011, to the bottom in March this year.

Thus, price action itself implies that silver (SLV proxy) is still in a bear market.

The chart allows for the probability of further downside action once the upside objectives are met.  We can see a hint of that downside objective (circled) as somewhere below the 2009, lows.

Of course, expect the market and analysis hysteria to ramp up as (or if) SLV approaches the 25-area.

If or when that happens, we’ll be looking for clues that a reversal is imminent or if by some other measure, “this time is different”, suggesting that silver will continue higher.

 

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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.

Mission Accomplished!

One day after Pump-n-Dump?, MRNA launches above and closes above resistance on record volume of 103-million shares.

Next day, price action closes below resistance and the trap is set.

2020-07-21_9-49-12-MRNA-Daily-3-bar-notesYesterday (Monday) at the open, MRNA gaps lower -7.4% and didn’t look back.  It closed down -12.83%.

Today, another gap lower.  Price action is hovering in what appears to be an attempt to stabilize.  The question is, stabilize for what?

It probably doesn’t matter as the professionals may have finished their directive.

That is:  establish long positions at low prices, generate news events to get the general public excited, continue to foment the price higher, go all out with maximum volume, exit the longs and establish the shorts.  After that, price action takes care of itself.

That’s the way it works 

Anything can happen and even more (bullish) volume can come from somewhere to drive the price to new highs.

With that in mind, there’s a possibility of an underside test of resistance.  Expectations are that such a test (should it occur) will fail and price action continue lower.

It’s likely we’ve seen the top of MRNA.

 

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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.