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.
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’.
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 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.
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.
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.
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.
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
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.
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.
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® 