After thirty-four years of researching the markets, focus has narrowed to three masters from the early 1900s; providing a solid framework for addressing the markets of today.
This update demonstrates how those tenets are being implemented.
Strategy:
In Livermore’s fictional autobiography (Reminiscences), he muddled around for years before identifying his niche.
That is:
‘What’s going to (or what’s likely to) happen in a big way.’
That insight has been used to identify the biotech sector as ripe for complete (and well deserved) implosion; more so than any other sector in the market.
For many months, the case continues to build for collapse.
Here’s just one more brick in the wall; providing even more support for implosion.
Tactics:
Wyckoff committed his entire professional life to decoding the market and its moves.
He is (as far as available data shows) the father of technical analysis.
Terms like ‘support’, ‘resistance’, ‘accumulation’, ‘distribution’, did not exist before is treatise, “Studies In Tape Reading”, published in 1910.
His bottom line:
Price is moved by a force of its own; having nothing to do (in a causal way) with fundamentals:
‘What is the market saying about itself.’
The biotech sector SPBIO, is tag-teaming with gold miners GDX (and GDXJ), for downside leadership.
SPBIO finished the week down -27.5%, from its February 9th (2021) high; running a close second to GDX, which finished the week down – 27.6%, from its August 5th (2020) high.
From a speed-of-decline standpoint, biotech’s in the lead.
Focus:
Loeb’s brutal admonition was: ‘The naïve, lazy, mediocre, ignorant and the incompetent “diversify”.
His follow-on corollary was: ‘Real market opportunities are few. If one is discovered, it must be used to its maximum extent.’
Loeb’s assessment of those in the market, is not much different from Wyckoff’s:
“The average man never makes a success of Tape Reading.
Right you are! The average man seldom makes a success of anything.” (emphasis is Wyckoff’s).
From the above list, ignorance can be fixed through determination, study, tenacity and the never-ending search for (market) truth.
The others, not so much.
Using Loeb’s tenet, that is, ‘focus’, we’ve taken it and have gone short and continue to go short (not advice, not a recommendation), the biotech sector via LABD.
Summary:
There’s no guarantee the short trade will work out; yielding a significant gain.
Any number of things can happen:
Internet outage, power outage, terrorist attack, supply chain and transportation shut-downs … literally, anything.
However, being short (from a personal standpoint) is better than wringing one’s hands, cowering in fear, looking to the (bought and paid for) financial media to provide direction on what to do in this unstable environment.
Epilogue:
By using the life’s work of Livermore, Wyckoff & Loeb, its been determined, being short biotech (and possibly the mining sector) is the appropriate market stance.
With the caveat that even now, one might need to exit the trade; it still appears at this juncture, the on-going short (not advice, not a recommendation) is the most focused profit opportunity given the current environment.
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.
The unmarked hourly chart (above) of inverse fund LABD, shows the location of the last update.
That update called for LABD to reverse higher; based on thrust action of the market itself.
Soon after (magenta arrow), LABD pivoted higher.
The right side action has a familiar repeating trend:
The chart below is a compressed version.
The repeating lines have been added. Arrows show contact points:
Strictly as a courtesy, daily chart of LABD is below with notations of buy and sell (not advice, not a recommendation) for my firm’s main account.
A good many that monitor this site have probably become bored with biotech … just as they did with Steven Van Metre’s analysis of bonds (back at the lows).
Van Metre is providing an excellent service. True, he probably has people moving their accounts to him. He’s running a business after all.
However, that does not negate the fact, he’s one of, if not the only one saying that we’re about to enter a deflationary environment (if not just temporally); complete opposite the conformist (and media led) crowd of hyper-inflationists.
Even Johnny Bravo has said, ‘hyper-inflation will come … but when?’
Summary:
The short positioning in biotech (via LABD) continues: Not advice, not a recommendation.
Rumors are swirling now about power outages and cyber attacks with major corporation website shut-downs.
Does anyone really want be to playing around with long positions when torpedoes (to hit the market) are already in the water?
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.
The lower portion of the chart has Force Index widened to better show detail
The numbers are relative; showing increasing energy on hourly upward thrusts.
Downside energy is dissipating
Probability is high for LABD upside 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.
A pull-back to the hourly low (434.07), gives additional confirmation to the nascent reversal.
In the biotech sector, SPBIO is currently pulling away from the 38% retrace discussed yesterday (LABD higher).
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.
Boots on the ground update from Dan at ‘I Allegedly’.
Drastically reduced economic activity at premium retail locations.
From Uneducated Economist: There’s news the lumber mills are going to curtail production … right in the middle of summer … the high season.
Couple that with the strange ‘going’s on’ reported at this link concerning the database that’s being monitored.
Then, we have another strange ‘coincidence‘ that takes place every hundred years like clockwork.
Which brings us to the sector at hand: Biotech
SPBIO Analysis:
We’ve taken the hourly chart of biotech SPBIO, and inverted it; shown below:
Price action pushed through the spring set up conditions noted in the last update.
SPBIO went on to retrace to the 38%, level … where it is now.
Looking at the price structure of inverse fund LABD (not shown), the downward thrust energy on a daily basis has declined significantly.
That analysis to be forthcoming.
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.
Let’s use the images in that video and get deathly serious for a minute.
Imagine yourself walking up to one of the people in line, asking this rhetorical question:
“How’s that stack of silver?”
It’s no secret to anyone that’s been monitoring this site, we’re using the Biblical model (Genesis 41) for the current environment (not advice, not a recommendation).
That is: Corn and Grain (food) first … then gold and silver.
At first it seemed like a quaint alternative to the non-stop hyperinflation (no thought required) rants to continue ‘stacking’.
Now, it’s different. Now, it’s getting serious.
You won’t see that kind of line outside the bullion dealer.
Moving on to the markets at hand … once again, biotech:
LABD (SPBIO) Analysis:
After yesterday’s LABD behavior, the logical thing to do would be to put the stop at the session low.
After all, that low was just below the lows of the previous day. Good to go, right?
Wrong.
It’s wrong because that’s what everyone would do. It looks like from today’s action, that’s what everyone actually did.
Recall that price action is automatic.
If there are too many stops all bundled up at one location, the orders will (automatically) be generated to go that that spot.
LABD price action penetrated the daily lows at a deeper level early in the session.
In the process, it penetrated well defined support which in turn, puts LABD, in spring position.
That’s where we are now.
Springs are usually tested.
If price action can hold above the support boundary, expectation is for a rally to at least the top of the range: ~ 24.50 – 24.75
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.
There was an initial gap-lower open for SPBIO with LABD, opening higher … but then what happened?
Price action went all the way down (for LABD) to the prior session low. That low was then penetraed by just 0.04-points.
That’s just enough to clear out tight stops, novices and short-term traders; all in one shot (no pun intended).
The fact LABD price action immediately rebounded from the lows, now trading higher, indicates possible trend line verification.
LABD (SPBIO) Analysis:
The LABD daily chart (above) has potential right-side trend verification happening now.
Price action cleared out the stops and hit the support/resistance boundary (dashed magenta line) simultaneously.
The weekly chart below, has one potential move:
Many “Ifs”
If we’re verifying the right side of a trend line and if that trend line is actually part of a channel and if LABD price action is pivoting to the upside, then we’ve got a potential trade (not advice, not a recommendation) that might culminate during the third week of October when markets typically bottom out.
So, we’ve got three “ifs”, one “then”, one “potential”, one “trade”, one “might” and one “typically”.
That sounds reasonable 🙂
On the plus side, there’s not yet been a serious upside move in SPBIO, that would negate the downside potential.
Fundamentals are coming out by the day if not the hour. Whether or not it’s all controlled opposition is unknown to us in the proletariat.
We’re not counting on legal action but price action itself.
That action continues to say that biotech is sub-dividing lower with LABD higher.
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.
One has to wonder if the Oligarchs are going to make an attempt at lockdown … for our protection. Or, maybe it’s ‘for the children’.
Here’s just a little reminder of how small town Texas deals with community organizers.
Time stamp 0:13.
‘Hey, I’ll bet you I went to a better school than you went to.
I went to Berkeley, they didn’t screw my mind.’
You can’t make this stuff up.
At least in this town, the police are still protecting the citizenry.
Just think about how pissed these ‘Bubba’s’ are going to be when they find out Trump is part of the cabal as well.
No. 3
The boy that cried ‘wolf’
Nobody agrees with everything Jerimiah Babe has to say.
If you’re watching his videos, then you’re there to get some additional insight.
Comments to his uploads are usually friendly and complimentary … or may have a suggestion or two.
However, when you see something like this, it’s the mark of the unprepared; possibly one who’ll be an early casualty in the coming troubles:
But as the days of Noe were, so shall also the coming of the Son of man be. 38For as in the days that were before the flood they were eating and drinking, marrying and giving in marriage, until the day that Noe entered into the ark, 39And knew not until the flood came, and took them all away;
Noah spent anywhere from 55 – 75 years building the ark (now resting at the base of Ararat).
It was probably good sport to go down and hurl insults (like that above) … after all, nothing’s happened … yet.
No. 4
Plan, Prepare, then Win
Zig Ziglar probably said it best:
‘First, you have to plan to win. Then, you have to prepare to win. Then, you have to actually do the winning.’
The David Weis story from yesterday, is an example of implementing this approach:
First, I planned to win (being mentored by Weis):
The Plan:
What was going to be required to not be dismissed out of hand as unsuitable material.
Dr. Elder (a friend of Weis) had already shown that getting into a trader camp was an application/approval process.
Therefore, getting an audience (with these professionals) was not a done deal … it didn’t matter how much money you had.
I set out to educate myself as much as possible on Weis:
The Preparation:
Weeks before I sent off an e-mail asking if he still provided mentoring, I had memorized his part of the Elder video. Watching his section at least 20-times or more.
I also searched the internet for any technical articles he had published. I came across (and purchased) a two part series on Wyckoff and trading bonds.
That article had appeared in Stocks & Commodities Magazine in the early 1980s.
I purchased the Wyckoff Trading Course that he discussed in the video. My e-mail to him included those facts.
I had done my homework and was serious about the craft.
There’s no doubt, the up-front effort increased my chances of ‘passing’ the interview.
I was prepared to win.
The Winning:
Yesterday’s anecdote is proof of the actually winning.
Towards the end of the mentoring series, Weis asked me if I would give up my spot for others waiting in line.
I did and the sessions were never completed. That’s a story for another time.
No. 5
Ahead of the pack
The anecdote above brings up an important fact that’s also repeated in videos from Jeremiah Babe and Dan, iAllegedly:
Be ahead of the pack.
It may be the entire system of ‘woke’, along with supported and protected stupidity (disguised as ‘diversity’), is about to collapse in on itself.
If so, it will be messy and chaotic.
Being ahead of the pack gives you options. You can take action while no one else is around. There’s no apparent alarm.
Preparations can be performed more easily and without the stress that comes from running with the herd.
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.
If you’re serious about your growth with market analysis and trading, at some point in the journey, you’ll discover this fact:
The most successful and effective market speculators operate alone.
Livermore had his office with the ticker, ‘board boys’, and not much else.
Wyckoff (from his autobiography) refused over and over the overtures of his wealthy clients to establish a more personal relationship.
The late David Weis was the same; managing his own account.
One difference with him; he provided a mentoring service that passed on his valuable insight.
It was a steal of a price (back in 2011) … just $1,500.
Personal Anecdote (being mentored by Weis):
It was April, of 2011:
As Weis interviewed me on the phone, asking all sorts of questions about my background (engineering), my parents (my late father, a Yugoslav national, shot by Germans in an attempted execution during WWII), and my trading objectives, it became clear to me, I would pay whatever price necessary to gain an audience with him.
This all took place before his website was complete and before his book was published. It was sort of a ‘golden time’.
Stretched Growth:
Weis traded the futures markets. If I was to be mentored by him, I would need to get up to speed and trade futures as well.
I knew almost nothing (except they were highly leveraged) about those markets. However, I was determined to learn very quickly.
During the phone interview, which lasted maybe forty minutes to an hour, he did not mention (and I did not ask) the cost of his services.
As the call progressed, I was literally getting sick with anticipation.
Coming to a close, almost absentmindedly, he said: ‘It’ll be $1,500’.
I fully expected him to say, and would have gladly paid $5,000 or more … which was the going rate for a typical trading course.
He then ‘suggested’ that I open a futures account; our mentoring sessions would start the next week.
Fast Track:
After that call, three things happened in quick succession.
First: A check (he was old-school) was mailed off to him in Boston so that it would clear before the next week.
Second: I contacted TradeStation and got their futures paperwork to open an account. That happened quickly and $15,000 (an amount suggested by Weis), was wired to the account.
Third: Buy the time of the first session, I already had the futures account set up and had determined what markets I would be trading: The LIFFE mini-futures (now part of ICE Futures Europe) for gold and silver.
On The Fly:
One last thing about trading futures and learning quickly.
I noticed about two weeks into trading silver, the volume on the contract I was in, started to drop off.
I did not understand why the liquidity was drying up … that is, until I checked my e-mails.
Turns out, I was about to ‘take delivery’, and pay $37,000 for a bar of silver if I did not exit the contract (that day).
The entire time with Weis was a growth experience. Very painful most of the time as knowledge had be acquired on the spot.
During our sessions, I would have the phone to my ear and be feverishly taking ‘screen shots’ of his computer (via gotomeeting,com) as he progressed through the session.
This link is probably as close as one will come to a typical mentoring session.
No Group Consensus:
Going to the link and watching for even a few minutes, it’s obvious this type of analysis is in a class of its own.
Nowhere in the video does he mention P/E ratios, Sales-to-Book or any number of useless metrics.
Deciding to pursue this type of trading, will of itself, separate you from the crowd.
The mainstream financial press will never present this level of detail. The general pubic does not have the intellectual capability or discipline to really get down and craft this skill.
Of course the financial media, YouTuber’s and the like, are all too happy to cater this (mediocre) crowd by showing their supposed prowess on dissecting financial reports and/or pontificating on the latest Fed speech.
Little does the public know, this type analysis (fundamental metrics) is just a ruse; a distraction promulgated over the life of the markets to distract and disable the masses.
The fact that ruse keeps going, is proof in itself of its effectiveness.
Which brings us, once again, to biotech.
SPBIO (LABD): Analysis
In this case, which could be one of a kind in history, the fundamentals are important.
Those in the biotech sector have intentionally (depending on whose data is used) fatally poisoned millions if not billions.
Their natural immune systems have been forever destroyed and their life expectancy drastically shortened.
Even so, this fundamental backdrop must not cloud interpreting the market behavior at hand and the Wyckoff analysis.
We’ll start as Weis does in the video link, with an un-marked chart. Daily close of inverse fund LABD:
Next we’ll show how the right side action is alternating its behavior:
At this juncture, the market is not able to retrace.
Price action from the last intermediate low in late June, has formed a double, then single, and then no bottom.
Adding in the repeating trendline study, LABD is currently near a contact point on the right side trend:
Price action itself points to more downside for SPBIO (LABD higher).
With the overall markets closing poorly on Friday, the implication is for lower action in the coming week.
Consumer All Done:
The post on Friday, showed how the consumer is literally spent.
Then, couple that with Dan’s (iAllegedly) assessment: “The Party’s Over”; the pressure continues to build.
We might take the example of lumber futures as a model for upcoming price action; essentially, straight down -66.3%, in 48 trading days.
Wistful Conclusion:
David Weis is now gone (passed away last year).
After listening to his voice once again, I have let it personally admonish me to remain focused and diligent.
Even a decade after our mentoring sessions, with focused effort, the search for mastery is never ending.
To borrow a quote from Oswald Chambers: “One must determine to be limited and focus their affinities.”
We’re at a critical time in world history and that’s not overstated.
Our conditions have brought so many cowards to the fore.
In a way, it’s a tremendous public service.
It’s clear to see who is leading and who is cowering in place.
If anyone has a hope of surviving (even prospering) in this environment, for some it will be taking control of their own market decisions; separating themselves from those who want them to remain ignorant.
Stepping out into the raw edge of life, has no guarantee of success.
However, what is guaranteed, is stretching of oneself into a new level of thinking, experience, and wisdom.
That, is its own reward.
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.
This article, just out from ZeroHedge, says ‘consumers’ are in a revolt.
No more high prices.
Buying plans for the major items, housing, auto, appliances has declined dramatically.
One chart, linked here, shows consumer complaints about high prices are the most since the data started … 1961.
The reality is the retail consumer has come to the end of the rope.
To loosely quote Von Mises; ‘If you don’t voluntarily get your spending under control … the market will do it for you.’
To quote another financial source, Steven Van Metre; he has discussed for months, that high prices will be rejected. The economy will contract and bond prices will rise.
Bonds have indeed gone up in anticipation of contraction; or forecasting an outright collapse.
Throw into the mix that we’re going to have some kind of ‘fatality event’ this coming winter; for sure, there won’t be much demand for high priced items … just from the contraction of the population itself.
Which brings us to biotech (SPBIO).
SPBIO (LABD) Analysis:
The unmarked chart of inverse fund LABD is first (just to give perspective):
Next we’ll show that LABD has or is testing support and at the same time, confirming a trendline:
Biotech is the downside leader … sometimes tag-teaming with gold but for the most part it’s biotech.
Positioning:
It’s no secret I have positioned my firm short this sector in a big way since April of this year (not advice, not a recommendation).
That position has been adjusted over the months but has been steadily increased since the intermediate low on June 28th.
Since that low, the position has been increased six times (including yesterday) and may also be done so today.
Summary:
Once again, we’re heading into the weekend. The S&P (SPY) has just printed ‘out-side-down’.
Anyone still want to hold long the market?
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.
The Danger Point® 