Author Archives: thedangerpoint

Sentiment Shift

March 21, 2021 By in Biotech, Bonds, IBB, Lumber, SPY 1 Comment

There’s been a change in direction; a sentiment shift.

Not in any particular order:

The Fed will not, or does not want to control the long end of the curve (long bond).

Interest rates (mortgage rates) are now rising and have been there long enough to start affecting the real estate market.

As reported by Uneducated Economist, there’s been a shift in behavior of his lumber customers.

Instead of furiously attempting to secure lumber (as prices continue to rise), now, there’re backing off; Not wanting to be holding overpriced inventory if/when there’s a reversal.

Remember:

Sentiment first. Then volume. Then direction

From way across the pond, Bjorn Andreas Bull-Hansen gives his input that ‘Things are changing … the entire structure of society’.

He also sates, as this site has done many times … ‘it’s not coming back’.

Has all this fed into the markets?

Let’s take another look at the S&P 500 (SPY), analyzed on the 15th.

At that time, we stated the SPY’s at the danger point.

The original location of that analysis is the orange arrow. Indeed, the SPY continued a brief rise before reversing.

Downward pressure (thrust energy) has increased.

Unless it’s a flash-crash, markets do not go straight down.

The SPY shows a nascent reversal. Price could come back to test resistance (black line) or continue to decline from here.

It’s important to note the overall market position (of the large indices) as they affect everything else.

With that, our focus remains on biotech (IBB) as it appears to be the weakest of the major sectors (not advice, not a recommendation).

Sunday futures open in a few hours.

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.

Run The Stops

March 20, 2021 By in Biotech, IBB, LABD, Martha Stokes, Project Stimulus 1 Comment

It took the entire session on Friday for price action to hit the LABD stop @ 18.96.

It’s the way it happened, that defined what happened next.

Since we don’t have access to the order book, we can only conjecture where stop orders had accumulated.

The market’s interested in transactions, not levels. Wherever there’s a preponderance of orders … that’s where it goes.

Martha Stokes, CMT, put it well when she said (paraphrasing):

‘The Market Makers don’t know you are there; they’re not interested in your tiny little stop order.

If your order does get taken out, it’s because too many small traders put their stops at the same location.

There’s an order imbalance. The market’s response is essentially automatic … take out the stops.’

While the original LABD 18.96, stop may not have been a popular location for the small (and maybe big) traders, price action throughout the day could have ‘pumped’ the stops to that location.

Case in point is the huge block trade just at the 1:00 p.m. EST, mark.

At that point, 31,500 shares went by (on the tape) at price 19.10 … which equates to over $600,000 in one transaction.

So, where are you going to put your stop for that position. Below the market, right? Maybe at 18.95 let’s say? Especially so ,when price action instantly rallies away from that entry; all the way to 19.78, intra-session.

The stop would appear to be tight but well positioned.

However, if there was a stop for that huge block and it was too close to the market (with other stops accumulating), it would act as a magnet for price action; drawing it back to that level to get the transaction (hit the stop).

Of course, it’s all conjecture and we won’t ever know for sure.

If the LABD market opens significantly higher (IBB lower) on Monday, then our assessment looks correct.

A lower or unchanged open, signals us to get out. If that happens, then IBB is likely to be heading higher.

As you may have guessed by now, the response to all this kabuki was to re-position the stopped-out order.

The table below has the summary:

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.

Project Stimulus: First Trade

March 19, 2021 By in Biotech, IBB, LABD, Project Stimulus

The first objective on the newly announced ‘Project Stimulus’, is protect the position.

As yesterday’s announcement stated, we’re taking the stimulus payment and trading a separate account.

The trading techniques to be used are presented on this site.

The magenta bar shows the entry at LABD 18.835 (not advice, not a recommendation) opened during the Fed speech this past Wednesday.

The reason for the entry at that time was two-fold.

First:

Biotech IBB was already at 50% retrace and had rejected that level once.

Monthly and weekly momentum MACD, indicators were (and are) pointing down; giving extra weight to a potential reversal.

Second:

Empirical data (i.e. experience) gathered over a thirty year period had shown, whatever direction the market took during a Fed speech, was quickly reversed in the coming days:

I’ve labeled such events as “Fed-Fake”.

At this point, the position is well in the green, closing at $1,552, yesterday. We’ll be putting in a hard stop at 18.96, shown above.

If we’re in a sustained reversal, it’s not unreasonable to expect price action to get back to previous near-term highs (lows for IBB).

Using highly leveraged LABD (not advice, not a recommendation) that would equate to about a 50% gain.

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.

Project Stimulus

March 18, 2021 By in LABD, Project Stimulus 7 Comments

A check for $1,400, figuratively just came in the mail

We’re going to take that, trade a separate account, see where it goes.

Six-percent of those surveyed at this link say they’ll ‘invest’ their stimulus in the markets

So, we’ll join them. Mater of fact, yesterday was the start.

With 74 shares of LABD, entry point @ 18.835, we start the project; not advice, not a recommendation.

74 shares at 18.835 equals $1,393.79 … good enough.

Details such as account targets, objectives, equity curve and trade execution process, to be announced.

As of this post (2:21 p.m. EST) today, the balance is up to $1,465 … so, it’s off to a good start.

More later.

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.

Gold (GLD) Path to 166

March 18, 2021 By in Uncategorized

Early action GLD points to a rebound, target area 166.

The 30-minute charts shows a push below minor support (black line) that’s retracing.

Any time a market pushes below established support, it will attempt to ‘spring’ off that support level.

In this case we’ve already identified the 166 area as the target.

At this juncture, a GLD target of 166 would correspond to an April ’21 futures target around $1,765.

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.

AMGN, Gap Filled

March 18, 2021 By in AMGN, Biotech, IBB, LABD, Positions

Price action pushed past yesterday’s analysis to fill a price gap from February.

What’s next is the question.

The answer may be in the pre-market, where AMGN is down -1.25% and inverse fund LABD is up +4.7%

If biotech IBB pushes below yesterday’s low of 154.45, we’ve got tentative confirmation the reversal (which tested its highs yesterday) is going to continue.

We remain short this sector via LABD (not advice, not a recommendation) with a hard stop @ 17.80

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.

As Promised, Amgen

March 17, 2021 By in AMGN, Wyckoff 1 Comment

AMGN’s at a confluence of Fibonacci projections.

Yesterday’s update hinted that AMGN was in a special situation. This is a brief detail of conditions.

First, let’s understand that momentum indicators, MACD on monthly, weekly and daily, all point higher.

If we’re at the downside reversal, the inflection, we’re documenting in real time how it’s taking place.

On the chart, two Fibonacci tools are in use; a retrace tool and a projection tool.

The retrace is from the all time high posted on 1/28/21, to the most recent low on 3/4/21.

The projection tool has been placed on the recent upward action from that low and estimating where the a-b-c (corrective) waves are terminating.

The market itself determines what levels are important. This is one of the main Wyckoff tenets presented by him over a century ago.

It’s clear price action is hesitating at the confluence of a 38% retrace and 100% projection (‘a’ and ‘c’ waves equal) on the chart.

Since AMGN is the largest cap in the IBB, ETF, its behavior has an outsized effect.

A downside reversal from this point, the 38% retrace level, would indicate significant weakness for AMGN.

We also have today as Fibonacci Day 34, from the all time high.

The retrace high may have been yesterday or we may get it today … right around 2:00 p.m. EST, at the Fed announcement.

Update: As this was being written, AMGN just posted a new retrace high.

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.

Pre-Market: Biotech Lower

March 17, 2021 By in Biotech, IBB, LABD

Biotech has reversed.

Inverse LABD, higher in pre-market, approx: +5%

There are essentially two scenarios:

First, IBB is retracing, gathering fuel for new highs

Second, IBB has reversed and is heading much lower

Target levels to be identified and reviewed in a subsequent update.

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 50% Retrace

March 16, 2021 By in AMGN, Biotech, IBB, LABD, Positions, The Speck 1 Comment

Biotech pulls back 50% and the bulls look tired.

Update 12:23 p.m. EST, noted below in red

The 15-minute chart of inverse fund LABD shows how successive moves lower (higher for IBB) have covered less distance.

It’s very early in the session and price action at this moment is fighting it out at LABD 18.00, area.

We’ve maintained our short position (not advice, not a recommendation) but have the sense, if there’s not a reversal at this point, IBB could be working up for new all time highs.

This is the danger point.

Current LABD low for the early session is 17.91 … a good place for a stop.

LABD pushed down to 17.80, early in the session before reversing.

It has just passed 18.28, a new hourly high. AMGN to be covered later, at important inflection point (down).

Short position via LABD maintained (not advice, not a recommendation), hard stop at 17.80

With markets at record prices, Fed announcement tomorrow, no more stimulus (likely), forbearance to end, possibility of the ‘speck’ blowing wide open, one gets the sense this may be an important 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.

S&P 500, Danger Point

March 15, 2021 By in IBB, QQQ, S&P 500, SOXX, SPY 1 Comment

Early in the pre-market, SPY is trading unchanged.

Looking at the daily SPY close, we’ve got a tentative breakout just above resistance (black line).

Lower right of the chart shows upward thrust energy has declined significantly … right along with volume.

Yesterday’s update showed longer term momentum (monthly, weekly) for the S&P was pointed up. Continued price action drifting higher is possible.

However, if there’s a reversal in the making, this is a good place to start.

The buyers (volume) have backed off at this level; leaving the SPY hanging just above breakout resistance.

The SOXX, QQQ, and IBB are well off their highs and may be leading the way lower. Our focus remains on shorting biotech IBB, which is the weakest of the three (not advice, not a recommendation)

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.