Author Archives: thedangerpoint

Bond Test

December 2, 2020 By in Biotech, BIS, Bonds, DUST, GDX, TLT 1 Comment

Bonds (TLT) were hit hard during the last session.  Are higher rates ahead?

The short answer is no … if the test shown in the TLT chart holds.

What we have is typical market action at a significant reversal. 

Putting it in perspective, the push below support (blue line) lasted a full three days before reversing higher.

Then we have twelve days of upward recovery until yesterday.  Price action was slammed -1.57%.

It might look like we’re headed back to lower bond prices and higher rates; in effect, what we really have is a test of the reversal.

You can almost feel it. A major event is near.

The equity markets at all time highs … extremes of ‘retail’ participation never seen before. 

Couple that with the largest-ever short position in the bond market (about to get squeezed). 

The dollar’s at the bottom of its trading range … gold already heading lower.

The sense is a major market reversal is very near.  It’s probably already happening but just not obvious enough … yet.

We’re not going long the bond market but rather going short other markets.

Most of the short position in DUST was exited during the last session when price action came back to the intra day highs.  The potential squeeze got a reprieve at least for the day.

It’s important to note, yesterday’s GDX move went to a near exact Fibonacci retrace of 23.6%.  The down-trend could proceed at any time.

Separately, a short was entered in the biotech sector via BIS (not advice, not a recommendation).

Pre-market activity (as of 9:02 a.m. EST) for IBB indicates a lower open with BIS correspondingly higher.

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.

After The Close: Biotech

December 1, 2020 By in Biotech, BIS, IBB

Attempted breakout that failed … thus far.   That was today’s action for Biotech (IBB).

The (weekly MACD) divergence set-up has been in the works for awhile.  The first time weekly MACD was discussed was this report nearly two months ago.

With the Dow reaching an apparent top last Tuesday and with other markets (S&P, NASDAQ) following suit today, there’s potential we’re at a pivot point.

Note that Biotech’s all time closing high remains IBB 145.80, reached back on July 20th, this year.

Volume for today’s session increased 43% over yesterday. However this session only pushed 0.23%, higher; opposed to a 1.23%, gain on Monday. 

Upward progress slowed significantly in the face of higher volume.  The bulls are tired.

While external world chaos rages, here, here and here, we’re focused on price action and taking advantage of low risk opportunities.

The response was to go short via BIS (not advice, not a recommendation) at BIS 25.61, with a stop set at BIS 25.46.

Note on stops and trading:

Every speculator has their style.  We’re perfectly comfortable getting stopped out and re-entering several times on what is considered a viable set-up.

The current position may be stopped out at the next session.  Depending on the price action at the time, the bearish divergence on the weekly may still be in effect and allow for a re-entry into the trade.

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 Short: Initial Entry

December 1, 2020 By in Biotech, BIS, IBB

At this juncture, 1:12 p.m. EST, IBB has retreated from the all time highs.

A close below resistance at this session would be significant

Just 1.99-points shy of the target: Initial short via BIS @ 25.60 (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.

Biotech (IBB) Nears Target

December 1, 2020 By in Biotech, BIS, DUST, GDX

Pre-market activity shows IBB near 147.00, just 3-points away from the 150, target and right at the high set on July 20th, this year.

If IBB reaches that target (this week), it would automatically set-up a bearish divergence on the weekly chart.

That divergence would be on both the MACD lines and the histogram … a rare occurrence.

It’s not an automatic short entry (via BIS).  It’s a low risk area that’s important to watch.

In other markets, gold (GLD) has rebounded, up about 2% in the pre-market. However, price action remains in a congestion area of both resistance and support between 165 – 170.

The miners GDX are up as well and also hitting the underside of resistance. 

In addition for GDX, the 35.80 – 35.90 area is a 23.6% Fibonacci retrace for the entire down move that started on August 5th this year.

From a trading perspective, we’re short the sector (not a recommendation, not advice) and have a stop in DUST that is likely to be hit at the open.

If this action in GLD and GDX is just short-covering, we’ll know fairly soon. Under such conditions, price action begins to erode quickly as the shorts cover and the bulls are too weak to keep prices higher.

The short (DUST) position may be re-established (not advice, not a recommendation) during this session or following ones.

The bearish assessment of the mining index (and gold) has not changed. Gold and the miners may be leading the way down as reported here. 

The market will do everything in its power to make sure it throws off and frustrates as many bulls/bears as possible.

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.

It’s a Squeeze

December 1, 2020 By in DUST, GDX, GOLD

As of 10:26 a.m. EST, price action in the miners, GDX is exhibiting the characteristics of a short squeeze.

A gap-up open that’s quickly eroding.

Trading was in a narrow range for thirty minutes between 35.50 – 35.70, before breaking lower.

As long as the high of 35.83, for GDX is not challenged, the squeeze may be over … that fast.

If so, and GDX closes lower than yesterday, it would indicate a high probability for a swift, decisive move to much lower levels..

The firm’s own position in DUST had a stop at 21.19.  In a discretionary move, based on price action itself, the short position (not advice, not a recommendation) is being maintained

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.

Was That The Top?

November 30, 2020 By in BIS, DIA, Dow 30, DUST, GDX, Gold Miners, Holiday Turns, Wyckoff

“If the market (S&P, Dow, NASDAQ) opens lower tomorrow, Friday and continues decisively lower, we might add Tuesday, November 24th, 2020, as another empirical data-point for Holiday Turns.”

The quote above was from last Thursday’s update.

Well, it looks like the market waited one additional day to make its turn.  For the Dow 30, last Tuesday the 24th, was indeed a high.

We’ll see how far this one goes.  It’s a high but whether or not it’s THE high is not known.

Given the market conditions being reported on this site, long positions look tenuous indeed (not advice, not a recommendation).

The ever helpful, knowledgeable financial media says ‘it’s the best month since 1987’.  No elaboration on that one is necessary.

The takeaway is, understanding that market pivots tend to occur during a holiday week … when no one is looking.

In other markets, gold (GLD) continues lower and is attempting to take the miners (GDX) down as well; currently oscillating near unchanged.

Biotech pushes into its breakout but at this juncture (11:53 a.m. EST), it looks weak and may not have energy to get to a new all time high.

It should be obvious the manipulators are hard at it … attempting to get the sector (IBB) to move high enough for gains on the long side, then turn around and establish low risk short positions.

Wyckoff noted that under such conditions (exit longs, enter shorts), daily volume will be two-to-three times greater than typical.

Chart of DIA is below … showing reversal since last Tuedsay, the 24th.

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.

Gold Bulls in Denial

November 29, 2020 By in DUST, GDX, GOLD

Now that everyone’s in shock over gold (and miners) going lower, they’re telling us ‘the bull market’s still intact’.

If you completely missed the bull trap, why should your analysis be viable now?

Anything can happen that’s for sure.  The futures markets open in a few hours and gold could go into a rally.  It could … but will it?

When a trap like GLD is over three-months in the making, those in charge, the bears, will attempt to use it to its fullest extent. 

Those on the wrong end, are the ones providing downside fuel.

The bears set the trap and give it a push.  Now the bulls are selling their positions driving the market lower.

Effective traps typically go farther and last longer than anyone expects.  The most likely target for the current move is shown as the blue oval.

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.

Seabridge Gold

November 28, 2020 By in FNV, GDX, GOLD, NEM, SA 1 Comment

During the coming ‘insolvency event’, could Seabridge Gold (SA) get back down below the $6.00 level?

If there’s any take-away from 2020, it’s that anything can happen.

Recent SA price action shows a wide trading range with high volume. 

Typical market behavior is to come back and test.

Looking at SA from a relative strength perspective, we have the top three majors (GDX) listed in terms of the highs in August, to most recent lows:

The three majors are ‘officially’ in bear markets while SA is hanging just above the – 20% level.

On a relative scale, looking at price action, SA is reluctant to head lower. It’s exhibiting relative strength.

If and when the markets (S&P, Dow, NASDAQ) reverse in earnest, there’s likely to be wide spread panic. Just like last time and probably worse.

It’s the person (or entity) that keeps their head under such conditions that has potential to establish long-term, low risk positions.

As a side note: If and when we get there (panic selling), and if SA pushes below well established support (6-area), the initial plan is to open a major long position … but with a significant caveat.

That caveat is:  We’ll take possession of the actual physical shares (not advice, not a recommendation).  The broker could put up a fuss and charge a fee.  So be it.

The world economic forum has already stated, the next “planned” event will be cyber attack. 

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: Upside Breakout

November 27, 2020 By in Biotech, BIS, IBB 1 Comment

Wedge patterns are the end of the line.  They typically come after a sustained move whether it’s up or down.

IBB has been oscillating and coiling for weeks.

The last trade in this sector was a short position (via BIS), opened October 14th, then closed the next day for a gain slightly higher than 4%.

Back then, the thinking was IBB is to make new highs just before the election (in turn posting a bearish MACD on the weekly) and then reverse.

It didn’t happen.

This is the way of the markets.  Setups begin to form, come to fruition or fade away. 

Contrary to what the advertisements say (to lure the uninitiated), you don’t “work five minutes a day” and achieve phenomenal success.

It’s just another lie … at this point we should all be used to that. 

If IBB continues higher in a measured move to the 150-area, it will push past resistance and post all time highs in the process. 

It could set up for a bearish MACD divergence as well.

If and when this happens, depending on price action, we might see another low-risk area for a short position.

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.

When the Levee Breaks

November 26, 2020 By in DUST, GDX 1 Comment

‘When the levee breaks, I have no place to stay.’

Or, to quote Steven Van Metre (time stamp 30:03):

“… and they know in a computer traded market which this is, that’s massively overvalued, it’s going to send stocks down faster than ever before.”

That sentiment dovetails directly into the firm’s stance:  Work only the short side of the market.  It can break at any time.

We’ve already seen major brokerages can’t handle huge volume surges during mass client access. 

The latest episode was Schwab’s system lockup.

… and that’s when the market is going up!!!  What’s going to happen when it goes down with the same (or more) velocity?

As GDX continues to deflate with very little upside bias thus far, the short position was increased (not advice) on Wednesday.

The chart shows the current trend-line and the short entries (via DUST). 

If we are in a real deflationary event, if gold and GDX are leading the way lower, the expectation is for a steady sustained and relentless decline with few if any upward spikes.

Such downward action has been seen before; especially in the oil markets.

The stop for DUST has not been moved (not advice) and is currently at DUST, 21.19.

A new daily low for GDX will allow the stop in DUST to be moved higher.

If the market (S&P, Dow, NASDAQ) opens lower tomorrow, Friday and continues decisively lower, we might add Tuesday, November 24th, 2020, as another empirical data-point for Holiday Turns.

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.