Amgen (AMGN) Breaking Lower

Amgen’s the largest cap in the biotech sector ETF, IBB.

Loss of momentum (magenta arrow) is clear.

Upside energy (weekly) MACD has been dissipating for over a year.

So, this is no transient direction change. Zooming into the daily chart shows hesitation at the trend line.

Then last Friday, a significant move away from that trend.

When there’s a trend break, typically there’ll be a test of that break.

In this case, such a test would cause price action to move higher; testing the underside of the trend.

Because there’s been so much congestion at the trend line, we may not get the upside move.

It may have already self-tested. From here, price action could just make its way down to the measured move target ~ 164 – 165.

Positioning:

We’re short this market via LABD (not advice, not a recommendation) and have moved the stop to 18.17, based on yesterday’s action.

Summary:

If AMGN decides to test the trend underside, it’s likely to stop out LABD.

If price continues to decline (unabated) to target levels, we’ll probably exit at pre-identified IBB, target ~ 138 – 140 (approx: 35 – 38, LABD).

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.

Real Estate: Off The Chart

New downside targets for IYR are literally, ‘off the chart’.

There’s a good deal of support in the 84 – 86 area. So, price action hesitation is to be expected.

However, technicals and fundamentals have aligned themselves. Conditions are now in place for a persistent, sustained decline.

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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.

Failed Rally Attempt: Real Estate

Nothing gets sharks in the water faster, than a failed move.

Last Friday, real estate IYR closed below support (black line). Doing so, put itself in Wyckoff spring position.

‘Spring position’ is a technical condition of instability where price can reverse dramatically.

At the open yesterday, that’s exactly what happened. IYR launched nearly instantly to a 50% retrace.

From there it was a long day of moderate price erosion all the way to the last hour; then it all went south.

IYR closed just 0.22 points higher or +0.25%, after being as high as +1.73 points (+1.98%), early in the session. In addition, that close was back below support on the heaviest volume since February 2nd. … another bearish sign.

We can see momentum, MACD has exhausted itself and posted numerous bearish divergences.

On the fundamental side, just in the past 24-hours, there’s been a raft of news articles posted showing commercial real estate’s in serious trouble.

A short list of what has been found is below:

Mortgage market.

Mall values crash.

Bond tipping point.

Bond market calls Fed’s bluff.

U.S. Spending plummets.

Rising yields are now good for the markets?

IYR could still rally from here. However, with the conditions described in this post, it’s not likely.

Summary:

We’ve been short this market in a big way (not advice, not a recommendation) via DRV. The plan is to increase position size as long as price action allows low risk entries.

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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.

Active Trade: Short Biotech

The last update on the short position in biotech, said we’re keeping it until stopped out or target met.

Currently the LABD stop is located at 17.21 (not advice, not a recommendation).

The biotech IBB chart shows us price action is verifying the existence of the Neckline; The two (arrow) hits on the right side.

The deduction we’re in an H&S top, at this juncture is correct.

If IBB makes a new daily low, with LABD making a new daily high, then we’ll be able to move the LABD stop higher.

That new level will be defined by price action itself.

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.

Changing Hands: Bonds

The financial press is rolling out the usual suspects; bonds yields are going stratospheric and hyperinflation’s just around the corner.

A more likely view, one that’s actually based on reality, the price action itself, bonds just changed hands; from weak to strong.

Those selling or going short bonds (weak hands) at this juncture are potentially left holding the bag in a big way.

Taking a trip back in time to Livermore’s day (Reminiscences), he stated time and again, the large speculators could not enter or exit their positions at will.

They needed to have some kind of ‘event’ with heavy volume so that it would mask their moves.

It looks like we just had such an event.

The weekly chart of TLT, shows two major volume spikes. One where bonds reversed lower and now … a potential reversal to the upside.

We’re dealing with probabilities and over two-hundred years of market activity (since the Buttonwood tree).

Huge volume spikes have significance. They typically signal a pivot or the start of one.

Using that reasoning, we may have seen confirmation of rotation not only in bonds but the markets themselves; The S&P, Dow, Nasdaq are pivoting lower, with bonds and the dollar reversing higher.

Summary:

The futures market opens in a few hours. It’s typically a light-volume affair for bonds.

At times, Steven Van Meter presents in his updates how bonds have been typically slammed lower in the overnight.

That type of action has been going on for months. We’ll be looking to see if there’s a change of character.

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.

Real Estate: Downside Targets

IYR has reversed with a decisive ‘outside-down’ week.

This sector has likely seen its highs for the year and probably its all-time (recovery) highs.

The latest news from Steven Van Metre does not paint a good picture for the economy or the markets (bonds excepted).

Jerimiah Babe (J.B.) has also posted an update on Los Angeles. It’s a human and economic tragedy. Unfortunately, this is where the Cadillac has gone off the cliff.

We’ve continually held to the stance, there’s no recovery.

The “recovery”, is a mainstream narrative intended to keep the herd focused in the wrong direction and on the wrong things.

Judging by the hysteria with small cap short squeezes, physical silver and bitcoin (kind of hard to access when the power goes out), the promulgator to the proletariat, the mainstream media, has done an excellent job.

In fact, that is their job.

Interest rates might only need to stay elevated for a short while (a few weeks) to completely choke off any semblance of economic activity.

After that, collapse is likely to feed on itself. Even if rates eventually go back lower, it’ll be too late. The juggernaut has been set in motion.

This week had IYR posting outside-down. That in turn, added a print to the P&F chart which helped to complete a downside forecast.

Reaching the target levels puts IYR below all recent support. That support would then become resistance for any upside counter-trend action.

Ultimately, we’re looking for IYR to go below 2009, lows.

If that happens, it could take months or years. P&F charts are independent of time. They only show potential.

As provided in earlier updates, my firm is positioned heavily short IYR via DRV (not advice, not a recommendation).

From here and depending on market action, the plan is to increase that short until volatility prevents further, low risk entries.

As always, anything can happen and next week could be a miracle reversal. If so, we’ll assess price action at that time.

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.

Real Estate … Implosion?

Watching J.B.’s (Jerimiah Babe’s) Los Angeles walkabouts, proves commercial real estate’s already imploded.

The instant the linked video starts, we see the root of the problem.

Neo-feudalism.

Of course, it’s all part of the plan but that’s a topic for another time.

What’s shown in J.B.’s video(s) is that one after another, commercial properties are boarded up and fenced off.

One might think it’s only progressive utopia California that’s having a rough time; taking a look at comments to his videos shows otherwise.

Just one example taken from the video link:

“Even if the U.S. lifted all lockdown restrictions 100% TODAY, I still think for many companies, its too late.”

The economy is not coming back … not in our lifetimes anyway.

No matter what happens, re-building will take many decades. Even so, the destruction has to be completed first.

We’re nowhere near downside end (economy, markets or otherwise).

On Thursday you would’ve thought from the news, we just collapsed by 50% or more. In fact, the S&P (SPY) was only down -2.41%.

Think about what happens we get the hit … that does not come back.

As early as May 12th of last year, this site began to note the similarities of the markets to August of 1987. In retrospect, that post (and the ones that followed) seemed a little premature.

It’s a different story now.

Markets even more extended; bond rates higher.

Throughout the years, going back to the early 1900’s, the professionals always preferred down markets. Profits (and fortunes) can be made much faster and with more reliability.

Fear is much easier to gage (on the charts) than greed.

With that in mind, we can look at real estate with a clear head and assess the opportunities.

It turns out, not only has IYR got itself into a terminating wedge, it’s doing so at Fibonacci time frames.

During the past six-weeks, my firm (link here) has been positioning in and out, and back in, several times using short fund DRV (not advice not a recommendation).

Just yesterday, before IYR broke decisively lower, that DRV position was increased to its maximum level thus far.

Obviously, a new high in IYR is not anticipated. The reason for selecting real estate as a strategic short (unlike the LABD swing trade) is for the downside potential.

Inverse leveraged funds work best during a sustained, directional move. It remains to be seen if DRV was a good selection; not only for a trade vehicle, but for the anticipated collapse in real estate.

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.

Biotech: Downside Analysis

The short position in biotech is active and now has downside targets.

These updates are an example of letting the market itself determine the (trading) course of action.

Yesterday, we said that price action itself will identify the stop on the short position.

We’re using LABD (3X inverse, IBB) as the trade vehicle; not advice, not a recommendation.

Looking at the daily chart of IBB, we’ve got what appears to be a Head & Shoulders top.

Two sessions ago, the neckline was completed. Yesterday, was a counter-trend move.

If we’re in an H&S top and that neckline is penetrated, it sets up a measured move target.

Getting back to the short on LABD. Our stop is yesterday’s high in IBB which loosely corresponds to the low of LABD (approx: 17.19).

The market itself defined the stop.

Now, we’ll follow this trade to its conclusion. The plan is either to stop out or exit at the IBB lower target.

Pre-market activity, LABD trading higher at about +1.00%.

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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.

Biotech Short, Revisited

So, the biotech short via LABD got stopped out last session.

Even though price action by its own behavior early in that session said to exit (at the highs), the position was maintained for the sake of argument.

The original stop was set at LABD 18.35, which was the 4-Hour low, noted yesterday.

Late in the session that stop was hit.

The overall sector (IBB) remains in a reversal with both daily and weekly MACD momentum indicators pointing lower.

In fact, Weekly MACD has a double bearish divergence in the histogram with MACD lines about to cross to the downside.

Putting all that together, expectation for inverse fund LABD is to head higher after yesterday’s counter-trend move.

Once stopped out (at LABD 18.33), LABD was re-established at a lower price (not advice, not a recommendation).

That entry price is on the weekly chart below:

We’ve switched to a weekly chart to show there are two other times in the past year, where LABD had three weekly up bars in a row.

Those reversals had narrow ranges and thus were quickly negated. This time it looks different.

The current bar is not complete but with the overall market (S& 500) at extremes and ratcheting lower, probabilities are high LABD will close higher for the week.

As for setting the stop on the new position, we’ll let the market decide.

Counter-trend action in the early session is usually over by 11:00 a.m. EST.

We’ll look at LABD at that time. Till then, hard (emergency) stop is located at the weekly LABD low of 15.96

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.

Trading Tip: Trailing Stop

Here’s one method to use for a trailing stop; Have the market itself tell you were it goes.

The reason brokerage trading platforms have so many options with an endless list of indicators, is that’s what the (retail) public wants.

It has nothing to do (as usual) with what works best.

Wyckoff himself said the market defines the course of action. The “tape” as he called it, was the master for decision making and no other.

Let’s look at what the tape is saying about LABD, the 3X inverse EFT of Biotech (IBB).

The sector has already been traded profitably last week. Shown on the chart below is another entry. Also shown, is what may be the most efficient method for stop placement.

For LABD over the prior weeks, we could have extracted a large part of its move using a trailing stop based on the 4-Hour chart.

LABD itself has defined that 4-Hour looks best at this point in time.

So, that’s what we’ll do (not advice, not a recommendation). The stop will be at the nearest 4-Hour low (currently, 16.27).

At mid-session today, we’ll move it up to the next 4-Hour low and so on until stopped out.

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.