Is The ‘Bounce’, Over?

Early Session

S&P Bullish … Or Bearish?

This is how the S&P (SPY) looked before the open.

The blue lines show a small wedge pattern. Under bullish conditions, price action continues higher into a measured move; somewhere around SPY 449 – 450.

What we got at the open, is below:

The SPY opened lower and so far, has not continued its upward momentum.

It may be nothing; or it may signal the Right Shoulder of the Head & Shoulders, is complete.

As always, anything can happen. SPY may be just gathering steam for an attempt at new daily highs.

However, the action in biotech indicates the bears are moving into the markets; behind the scenes and slowly at first.

Biotech, SPBIO:

Biotech has opened lower (LABD higher).

Yesterday’s price action was entirely consistent with the ‘alternation’ discussed in that update.

For Example:

There was no (immediate) downward test from the September 17th low … and this time, the September 23rd low, there was:

We can see, after the open, price action for LABD is pushing higher (lower for SPBIO):

If we get a new daily high for LABD (above yesterday’s 19.62), it signifies the lower testing action is likely complete; the bears are taking control of biotech.

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.

Rule of Alternation: Biotech

Early Session

What Happened Last Time … Won’t Happen This Time

We have four more trading days until the end of the Third Quarter. It’s unlikely that biotech (SPBIO) is going to make a new quarterly high.

This morning’s early action has LABD (3X inverse SPBIO) essentially unchanged to slightly lower; higher for SPBIO.

The weekly chart of SPBIO, above, has been inverted to mimic the inverse fund LABD … but without the tracking (bias) errors.

The “tight” area of action has been expanded in the next chart:

We can see the wide, high volume bar from the week of 8/27, is being tested by the subsequent weeks and their upward action.

This is normal market behavior that has probably been repeating itself since the buttonwood tree.

Alternating Action:

The difference this time around, we’ve already had the ‘low to upward thrust’ (for LABD) that was negated last week with a test.

That test has now reversed as seen on the 4-Hour chart (inverted SPBIO) below:

Both downward thrusts (September 17th, and 23rd) finished the day at or near their session lows.

The ‘rule of alternation’, from Prechter’s Elliott Wave discussions, essentially says that; what happened last time, will not happen this time.

That leaves two scenarios for SPBIO and LABD.

Scenario, No. 1

SPBIO reverses from here and goes on to make new daily, weekly highs.

Scenario, No. 2

SPBIO continues its downward reversal into the next leg lower; potentially to the Fibonacci projection target (not shown) of 161.8%.

That would put SPBIO, at or near the 3,873 level … a decline of nearly 62%, from last Friday’s close.

Force Index:

Since the inverse fund LABD is heavily traded (2mil – 3mil, shares per day), we can use it as a good indicator of professional trader commitment

I say ‘professional’ because, as incredible as it may seem, the majority of market participants (the amateurs) do not understand or can’t grasp the concept, the big money is made on the downside.

The trading books that regale stories of massive gains, were typically trades to the downside … probably the most famous of which, was Livermore’s well documented short position during The Panic of 1907.

I’ve even talked to a former broker (for a firm that has 15,000 locations nationwide) who asked me when I was discussing the markets (and I quote): “What’s an inverse fund?”

I kid you not.

As touched on yesterday with Random Notes, the level of complacency, stupidity and ignorance has reached levels that are not going to be repeated in our lifetimes.

Market participants are either going to be wiped-out … or they’re going to get very smart, very fast.

I’m personally going with the ‘wiped-out’ scenario as it’s extremely difficult to come up to speed on a complicated topic (reading price action) while your account is being decimated.

Which brings us to the Force-Index chart of LABD:

This chart’s a little different than the rest.

The Force Index section (the lower panel) has been expanded to show the nuances of thrust action.

Even all the way back to the major thrust lower on August 23rd, we can see, downward thrust energy has been dissipating.

Recently, as shown with the blue arrow, downward thrust has evaporated altogether.

Summary:

It appears from the 4-Hour chart of LABD, we’re potentially at a major point of inflection (not advice, not a recommendation).

The rest of the indices (except the miners) are at or near their all time highs … with valuations (P/E ratios) stretched to the highest on record; going all the way back to 1962, if memory serves.

SPBIO is the only major index that’s about to post three down quarters in a row.

Obviously we’re short this sector via LABD (not advice, not a recommendation) with the understanding that anything can happen.

This market (SPBIO) along with the others could reverse and move to new highs.

However, at this juncture, it looks like the air’s coming out of biotech … slowly, at first.

Stay Tuned

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.

Random Notes

The Usual Suspects For The Week

Special “Silver” Edition

No. 1

Trucking Shipment Danger

Invoice factoring company goes bankrupt. Trucking and shipping shut-downs a likely result.

Link to the article is here.

‘How’s that stack of silver coming?’

The signs continue to stack up (pun intended) that accumulating inedible metals, non usable as a work tool or a medicine is a dead end; for now.

If you already have gold and silver … great.

At this point, we can see more and more, the ‘accumulation’ needs to be storable grains, legumes, proteins, water purification and medicines along with ‘protection. Go to time stamp 4:24.

No. 2

La Palma Eruption Continues: Increases Intensity

The best ‘boots on the ground’ reporting is coming from ‘Bushcraft Bear’ at this link.

You know it’s good as his videos are being stolen and re-packaged by those who can’t think or do for themselves.

Everybody’s so self-important and has something to say, right?

If you want to watch pure media sensationalism (with no actual data … other than lava temperatures), here is just one link among many.

No. 3

Stalag Luft III: ‘The Great Escape’

Drone footage of the path of the escape tunnel: “Harry”

Additional information on the event from a presentation by NOVA

Back when men had cajones and women didn’t.

No. 4

Shortages Starting To Cut Deep

Here we have reporting from a ‘regular guy’ in Connecticut.

It doesn’t matter how much silver or gold you have.

If it’s not on the shelf … it’s not there at any price.

No. 5

Acid Rain From La Palma To Hit Europe

I wonder what that’s going to do to crop yeilds … but wait, I have my stack of silver to save me. 🙂

No. 6

Getting Ready For Winter … And No Electricity

If I put my stack of silver in the fire and light it … will it keep me warm?

No. 7

Premeditated Murder

Link is here.

Scuttlebutt (unverified) on the alternate sites; corporate drug manufactures do not have liability indemnity if they engage in pre-meditated homicide.

No. 8

Quigley, Down Under

Does Quigley (Tom Selleck) have ear-plugs at time stamp 2:57???

No. 9

Taboo Scaboo … Goes To The Farm

For those following these updates, we’ve (at the residence) been raising a Leghorn Rooster (“Scaboo”) from a small chick … which is ‘against the rules’.

After six months, it wound up where he was spending more time, sometimes all day in the house. He was not able to go outside because he would start crowing.

Understandable as he was ‘outside’, a happy camper and surrounded by four hens.

Moving him to the farm of some friends is the best thing for him.

Apologies for the camera being in ‘portrait’ mode. I did not do the filming.

Here he is at his new home strutting around.

Look at the size of that comb!

Upon arrival, he immediately got into a scuffle with the ‘lead hen’ … that thinks she’s a rooster.

There was some blood and so they were separated for now.

No worries though.

He’s much larger than the rest and does not avoid conflict … i.e., he’s not a coward.

I suspect he’ll have it all straightened out in short order.

We have ‘visitation’ rights. 🙂

Meanwhile, the hens back at home have started laying.

Leghorns are very productive and will typically produce one egg a day.

At full production, that equates to 28 eggs a week.

In addition, we have about one year’s worth (and planning to get more) of chicken feed stockpiled.

Couple that with a three-tier, raised-bed garden (each bed is 192 sq.-ft., for a total of 576 sq.-ft.) that’s going year-round.

The other side of the yard has ‘mini-beds’ that are used for melons in the summertime.

The main beds are not used as the melons overtake the entire garden … being on the other side of the yard, allows them to spread out as much as needed.

All of our drinking water (including the hen’s) is filtered through a Berkey.

Thus far, this ‘homestead’ has made a serious dent it its reliance on the grocery store.

It’s taken eleven years to get to this point.

We’re in a long haul game (by the elites) that will likely last through the lifetime of anyone reading these posts.

No. 10

The ‘Unprepared’

As a corollary to No. 9, we have the ‘unprepared’.

YouTubers Jerimiah Babe, Dan ( I Allegedly) and now even a newer discovery, The Maverick of Wall Street, have all stated that some of their followers want to hear ‘good news’.

They say their posts are ‘too dark’ and negative.

I think in one of Dan’s recent posts, he even talked about those who are unprepared, attempting to make it look “cool” to not take action.

After dealing with the stupid, the lazy, the back-biters, the heel biters, gossips and the just plain idiots in the corporate world (24-years), stupidity looks like it may have finally run its course.

In a hopefully very rare comment (about myself), I’ll remind those reading, in the corporate career, I was one of the top Avionics System Integrators in the world; performing work as “Lead Engineer” for System Integration on Global Express.

So, I’m not making it up when recalling how I had to deal with the “tiny minds” as I came to know them.

I later went on to build an entire engineering department for an autopilot company that may have committed fraud.

They promised the customer a product they knew they could not deliver. They had already squandered the $200,000 initial payment (out of a multi-million dollar contract) for work that had not been done.

I was hired to build the department (hide that effort from the customer) while making it look like the company knew what it was doing.

Eighteen months later, the job was complete. As Dizzy Dean has said: “It ain’t bragging, if you’ve done it.”

I decided to leave that company and engineering entirely after I had chastised an engineer reporting to me, by giving him a poor review.

He then took that review to the HR department where the woman there decided on her own, she knew more about autopilots, system integration and aircraft flight test than I did.

The review was re-written by her; being more favorable to the engineer reporting to me.

I do not recall exactly if I signed the updated copy. If memory serves, I refused.

The rest it is history.

I left the engineering field entirely in early 2009.

The same level of effort and commitment I had in the corporate world, is now being poured into market analysis and other research; like backup power methods, seed-saving, managing livestock and homesteading.

It’s a long haul game as well.

This site’s not looking for the day-trade or even a swing trade. We’re looking for the big move … and spending money (account balance) to get it.

Everybody has their own trading style and time-frame. We’re openly disclosing that ours is focused on the long-haul (not advice, not a recommendation).

The recent reversal in Biotech, SPBIO (inverse LABD) may be just a blip … or the start of something much bigger. We’ll see.

Enough said.

Back to the unprepared.

Even if you’re prepared, it does not mean that you’ll avoid being taken down as well.

Idiots will indeed take some with them to the abyss just from being in proximity; or you (or me) being in the wrong place at the wrong time.

At least if you’re prepared, you might see it coming (for them) and sidestep so you’re not swept up in their self-inflicted carnage.

Stay Tuned

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.

S&P, Retrace … And Then?

S&P 500 (SPY) At 61.8%, Retrace

Actually, all three of the major indices, the S&P, The Dow, the NASDAQ have each retraced to (at or near) a Fibonacci 61.8%, level.

The daily SPY is shown above.

Taking away the Fibonacci retrace levels, then adding notations gives us the following:

It appears we could be at the right side of a Head & Shoulders top.

Price action rolling over from here, then bouncing around the neckline (before breakdown) would let us know, we’re in a significant reversal (not advice, not a recommendation)

Stay Tuned

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 … Reversal

Mid Session

Inverse Fund LABD In ‘Spring Position’

Yesterday’s action had LABD pushing past stop levels; resulting in one position being closed out … then re-opened late in the session (not advice, not a recommendation).

Price action as seen in the daily chart (above), penetrated the previous low from September 17th, and closed below that low (for LABD).

The open had an immediate rebound higher (SPBIO, lower).

LABD’s in position to move higher to a new daily high. Doing so, would help confirm a reversal’s underway.

Don’t Trust The Rebound

Here’s a link to an update that may be of interest. The first few minutes do an excellent job of eviscerating the so-called financial press.

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.

When It Gets … Tight

Early Session

Tight Price Action … Trade About To Happen

We’ve got the daily chart of LABD, leveraged inverse fund Biotech, SPBIO, above.

Next, we highlight the tight price action and note the failed push lower:

Scroll up and down between the two charts and you can see, this is an area where the market has firmed-up.

Tight action is usually (not always) a pre-cursor of an upcoming move. One side is taking control; about to take the market their direction.

Note: The last two days (including today) show a pivot of sorts … still very young.

Positioning:

The tight stop on the DRV position was hit early in the session. Exit was performed at DRV 4.4336 (not advice, not a recommendation).

That freed-up capital was then allocated to a position in LABD (again, not advice, not a recommendation).

The stop is tight at LABD 18.79.

Stay Tuned

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.

‘Fed – Fake’

After The Close

One-Way Before

Opposite-Way After

As is typical of Fed announcements, the market tends to go one way before the speech … then, the opposite way after the speech.

As real estate (IYR) pushed higher before the speech, it got just a little too far upward for comfort. The short position was closed out for one managed account.

As time progressed, price action was clearly setting up a spring condition; seen in the 30-minute leveraged inverse fund DRV, above.

The Project Stimulus Account closed its TZA position (for profit, table to follow) and the account then positioned long DRV, at about 4.49 (not advice, not a recommendation).

The stop is tight … the low of the day @ 4.42 (not advice, not a recommendation)

We’ll see what happens next

Stay Tuned

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.

Alternate Viewpoint

Mid Session

Gregory Mannarino, Updates

According to Gregory Mannarino, everything’s fine in the bullish camp.

The Central Banks still have it all firmly under control; ‘Evergrande’ is a non-event.

He’s clear on who’s really in charge of the world system … and likely correct.

We’re not yea or nay on Mannarino’s assessment. Jut providing it as a different viewpoint.

However, there are many types of ‘Black Swans’ … not just financial ones (on which he is focused).

One such potential is here.

If there’s a major volcanic eruption (Level VEI 5), the entire world dynamic will be changed instantly.

Not saying the La Palma eruption is another Black Swan … no, just that volcanic activity is picking up world wide and needs to be included in any ‘unforeseen’ event situation.

Real Estate (IYR)

Back at the markets, let’s see if everything’s ok in the bull camp for IYR.

The short answer is, it’s not decisive for either side as of this post

4-Hour Chart of IYR:

If we put in a Fibonacci retrace and then highlight the resistance area, it paints the picture more towards the bears:

Price action has reversed from a well defined resistance area … that just happens to be a 38.2%, retrace level.

So, we’ve got an excellent demarcation line.

If IYR price action gets significantly above the 38%, retrace, we’ll close out the DRV short (not advice, not a recommendation).

However, at this juncture, price action continues to retreat from the 38%, area. A good sign for the bears.

Stay Tuned

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.

Lowe’s … Re-Visited

Mid Session

Spring, To Up-Thrust, Completes

The daily chart of LOW (above), is how it looked one month ago. This report highlighted, certain market behaviors repeat.

Now, we have an apparent up-thrust completion.

There may be other equities in a similar (up-thrust) position as of this post … One such potential is Carmax (KMX).

Opinion:

Successful trading, is a game of attrition.

The LOW set-up, that looks to be complete (for a short position) has probably lost all market participant interest at this point.

The i-phone crowd, looking for the next fix, is not going to wait around and monitor for a month to see if price action follows a well tested set-up pattern.

After things get moving though … they’ll be back, as Dr. Elder states; ‘being both lazy, and late.’

Summary:

We’re not shorting LOW (not advice, not a recommendation) as there’re plenty of opportunities with leveraged inverse funds (again, not advice, not a recommendation).

The point of this update is to show, once again, the market, LOW in this case, has gone from ‘spring to up-thrust’; a repeating price action phenomena.

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.

Random Notes

The Usual Suspects For The Week

No. 1

Starsky & Hutch

This is the link to the original pilot episode.

Check out what ‘Elijah’, the trash-diving bum, has to say about world events at time stamp: 26:58.

Instead of taking his ‘hand-out’ to go buy booze, he runs down the alley and offers to buy coffee for his friend.

No. 2

Bible Study

(skip if you think it’s a ‘myth’ … good luck to you)

Luke 22: 31 – 32

31 And the Lord said, Simon, Simon, behold, Satan hath desired to have you, that he may sift you as wheat:

32 But I have prayed for thee, that thy faith fail not: and when thou art converted, strengthen thy brethren.

I guess it’s quite a stomach punch to be told you’re about to be handed over and spiritually torn limb-from-limb.

But take heart … the master of the universe he has held up his own hand against Satan (for you, Peter) and has said No!

Anyone with half of a spiritual wing-nut can feel the battle between good and evil raging … even now.

No. 3

Panic Into Junk Bonds

You can’t make this stuff up.

Us old-timers, have been here at least several times before. This time around, we intuitively know, there is (will be) no bottom.

No. 4

Jerimiah Babe Is Out! … Of California

I guess it took the wake-up call of a rigged recall election to tip it over the edge.

Stay Tuned

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.