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.
After the last post on GLD, price action pushed lower for one day before starting its anticipated move upward.
That lower push has altered the end point for counter trend action.
Adjusting forecasts and possible termination points is never-ending.
Each bit of price action gives a new data point; confirming, negating, altering the perceived scenario.
A 38.2% retrace of GLD, on a closing basis from the November 30th low, gets to around the 177.00 area
This area also corresponds with a one-to-61.8%, “a-b-c” move from that November low.
Time wise, if GLD continues higher, we’re still on track for around December 29th, having already passed the December 16th, forecasted turn.
Note: The December 16th date was off at this point, by one day. GLD may have reached its counter trend high on the 17th.
If there’s a trade set-up (to go short) during the last week of the year, the objective is to initiate a position in the Senior Mining Index (GDX) via inverse fund DUST; not advice, not a recommendation.
Because of the current ambiguity, no positions are planned … yet.
At this point, we’re using the deflationary model, or macro as outlined by Steven Van Metre. Price action thus far, is confirming that thesis.
Also worthy of investigation (more later) is how banks will get out of their massive long-bond positions. A potential scenario of Negative 6%, is discussed by J. Bravo and Jeff Booth.
We’ll see if further investigation of ‘Negative Six’ as we’ll call it, includes IRA confiscation.
Years ago, Prechter wrote just how simple that would be.
Summarizing his words:
We’d have a complete market melt-down. IRA withdrawal penalties made prohibitive; for your ‘safety’ only treasuries can be in the portfolio. Voila! We’re done!
What needs to be kept in the forefront of everyone’s mind accessing these updates is the overall objective remains the complete destruction of the middle class.
Even in the Bravo post liked above, at Time Stamp 19:50, he presents that destruction as the Neo Feudalism already discussed here, two-weeks ago.
Price action is the key. If GLD continues higher and past the 50% retrace, it indicates something else is afoot.
If that happens, the bearish look then turns bullish.
A downward reversal from this point would suggest the December 16th date was off by one day and the corrective move higher is complete.
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.
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.
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.
That’s part of the title from the Energy Sector report, linked here.
Those exact words were used just hours prior, in the pre-market update.
“Downward pressure is increasing.”
The short position in the sector is being maintained via DUG (not advice, not a recommendation).
The stop is set to be moved after today, based on price action.
Using USO as the proxy, oil is pushing a little higher as of this report (12:41 p.m., EST) probably because the dollar’s probing new lows.
Even though the dollar’s at lows, action thus far is reversal. A UUP close above 24.38, may signal trouble for those that are short.
The markets continue to be stretched to extremes. Based on data thus far, Energy Sector appears to be reversing (again) first.
Since that sector’s in a long term down-trend, XOP reaching its highs way back in June of 2014, we’ll remain focused on DUG.
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.
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.
Like GLD, in this report, GDX looks like it’s correcting in a-b-c, type fashion.
The GDX chart shows the Fibonacci projection with target indicated (blue line and arrow).
If the dollar (UUP, proxy) reverses and heads towards resistance 24.75 – 24.80, while gold counter-trends higher, we’ll have a tenuous situation.
Something will break; gold or dollar and probably both. The dollar higher, gold along with the rest of the market, lower.
With so many short on dollar and bonds, if UUP gets to underside resistance, a reversal (to test back to 24.50 lows) could be very short lived.
Keep in mind, when it all comes apart at the seams, it’s likely to be quick.
In other markets, XOP in the pre-market shows a slightly higher open with DUG showing lower.
After the session is over and if there’s a new daily high in DUG, the stop will be moved up (not advice, not a recommendation).
Separately, and as public service, here’s a link to an old article written by Robert Prechter Jr., way back in 1986; what it takes to be successful in the markets.
It’s a good read … probably the most important part is the last bullet item, No. 5 “The Mental Fortitude To Accept Huge Gains”
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 first hour is over: XOP (Oil & Gas) posted a new daily low.
Correspondingly, inverse fund DUG has posted a new daily high.
This is now, potentially a very dangerous juncture in the markets.
The firm is fully positioned (not advice, not a recommendation) in DUG.
Wyckoff analysis directives concerning bear markets, were used to identify (at this point) the single position.
More specifically, those directives are to identify the weakest market(s) not the strongest.
It’s the weak markets that will go down farther and faster during mark-downs (or bear phases).
Through a process of iteration (lasting months) as detailed in these updates, the weakest market up to now, has been identified and short positions opened via DUG.
Based on today’s action thus far, we have a hard stop in DUG which is the session low: DUG @ 24.727.
It’s unlikely price action will return and penetrate that (24.72) low.
The firm uses trading tenets from three market masters as detailed here.
There are essentially two main tenets from the late Gerald M. Loeb (former Vice Chairman of E. F. Hutton) and those are:
First:
Significant market opportunities are rare. When one is identified, use it to its maximum extent.
Second:
Do not diversify. Diversification is for those who don’t understand market behavior. Diversification is for the average … the mediocre.
That last admonition is harsh indeed. However, it’s backed by evidence from the top traders. Over and over we see their positions (detailed in the press after the fact) were highly concentrated.
Of course, none of the above is a recommendation.
In the next instant there could be an event which completely turns around the oil sector’s fundamentals … like a major earthquake taking out millions of barrels of supply.
As we have seen with seismic activity increasing dramatically, that scenario is not too far fetched.
At this point, we’re positioned in DUG. Hard stop, DUG 24.73
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 compared to two weeks ago, Force Index (thrust energy) to the upside in XOP, has declined over 60%.
The pre-market shows that XOP may open higher. If so, it will be into dissipating bullish demand combined with confluence of resistance discussed in the last report.
The first hour of trade may let us know if XOP has run its upward course.
As always, price action is the final arbiter.
The anticipation is for a reversal … soon. If not, then it’s time to wait (as is being done with Biotech, IBB) until price action confirms the change.
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.
Fundamental data such as the latest EIA Report on crude inventories, were opposite of expectations.
Opposite in a big way.
Inventories are building up as demand has evaporated.
At the bottom of that EIA link, is perhaps the most important data point of all. Global operating rig count is at all time lows … data since 1975.
Inventories are building up even in the face of collapsing rig counts.
Prior to that report, was anecdotal evidence (of the same) from comments made on ‘macro’ updates from Steven Van Metre.
Anecdotal evidence (if accurate) points to the possibility for investigation. It does not, and can not (like macro itself) tell you “when”.
When is the move going to start? When is the top or the bottom? That’s where the technicals and reading the tape comes in.
What the tape is telling us now, is the ‘when’ may have been last week. Specifically, the last three days of last week.
That’s when massive volume flowed into the inverse (2X inverse Oil & Gas Sector) fund, DUG.
From a weekly standpoint, volume was the highest since the week of February 9th, 2015.
Approximately $55-million traded hands last week as opposed to $25-million the week prior and $19-million the week before that (estimating average prices).
It’s evidence of significance with possible high volatility ahead.
The broker being used by the firm lists this trading vehicle (DUG) as “not marginable”.
The inference is, DUG is so volatile (both up and down) the broker is not willing to allow any of its own funds to be at risk for the trade.
That assessment is backed up by price action itself. Just last month, on Monday, November 9th, DUG opened down -20% from the Friday before.
Even with the margin restriction, huge volume rolls in.
Moving on to the weekly chart of XOP (SPDR non-leveraged Oil & Gas fund), we’re at a confluence of trend-lines.
This is the low risk area or the danger point.
Price action can go either way; the tape points to potential for a pivot point down (with DUG up) at or near this area on the chart.
At time stamp 16:28, in this report from Van Metre, the Put/Call ratio has exceeded the dot-com bubble levels of 1999 – 2000.
The XOP move higher under these conditions has the look of a huge short-squeeze. Fundamentals are not there (in a big way) to support higher oil and gas prices.
There is no (and won’t be) recovery for years; even decades to come.
It took the Dow Industrials twenty five years (late 1954) to come back to 1929 levels.
It’s highly likely we’re in a bear market set-up that’s an order of magnitude greater than ’29.
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® 