In the pre-market, the SOXX is up about +1.29%, trading at 236.90.
As discussed in the ‘comment’ section of the prior update, if last Friday was short covering, the expectation was for a lower open.
So, far it’s not there, or there’s more ‘covering’ to go.
From a Fibonacci standpoint (shown below), pre-market action is near the 61.8% retrace.
Semiconductor SOXX, 15-minute
As of this post (8:15 a.m., EST) SOXX is trading at the Fibonacci level (small black ‘brackets’ on the chart).
We can see that area is also resistance.
In-n-Out
This is what working at ‘the edge of the lake’ is all about.
Price action has not shown decisively whether it will continue higher or if we’re in a reversal.
A decisive push past Friday’s SOXX high, 237.35, likely means it’s going to attempt to close the gap left from the May 29th open (not advice, not a recommendation).
Looking at it both ways, the risk on a short position is being lowered further, or we’re on to new summertime highs (like August 1987) before potential 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.
To minimize risk, you need to position at the psychological extreme.
That’s not necessarily the top or bottom of a move, but it could be.
At Opposite Ends
From a trading standpoint, this past week saw a lot of activity.
Trades entered, exited, some re-entered, some, not.
The net result was two positions in separate, non-correlated markets.
One was shorting the SOXX, via SOXS, the other, adding to longs in Natural Gas via UNG (not advice, not a recommendation).
Fake, Fraud & Thought Shaping
By far the main hysteria is in AI, and its cohort, the semiconductors, SOXX.
From my first trade way back in the spring of ’87, to now, I’ve never seen a mass psychosis mania, fueled by propaganda, lies and made-up numbers, like this.
One can only guess where or when the shoe will drop that starts the whole (mind-shaping) scheme unraveling.
Evidence Of A Struggle
When price action pushes above or below established resistance or support, it’s at The Danger Point®
When that happens, depending on the action itself, the risk of being wrong (on an opposing position) is lowest.
The SOXX may be there now.
Semiconductor SOXX, Hourly Chart
It’s clear, a battle’s going on between bulls and bears at resistance (blue line).
Just before, during, or just after a holiday week tend to be pivot points in the market.
Said many times on this site, the most famous of these was September 3rd, 1929, the Tuesday following the Labor Day Weekend.
That was the all-time high, just before the crash.
Positioning
There are two positions open, each with a tight stop (not advice, not a recommendation)
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 day the SOXX, closed higher but failed to print a new high.
It’s now early in the session (9:55 a.m., EST) and we have a new daily low.
There have been sell signals before but this one has a different ‘feel’ (not advice, not a recommendation).
Yesterday, bonds (TLT) gapped open lower and broke below support; rates are rising … again.
The 1987 Set-Up
Those old enough, remember the set-up. Rates up (bonds down) and market rising to all-time highs at the same time.
A chart of the ’87 crash is here. Note, the high was in August, that year.
Now, a video from Robert Prechter, about the current historic extremes.
‘Not since the South Sea Bubble of the 1700s’
Couple all of that with bonds (TLT) breaking down and we could have that ‘inflection point’, saying we’ve reached the top (not advice, not a recommendation).
The Mania Goes ‘Manic’
Going back to this post, it said to expect the AI proaganda to increase as we reach the top and reverse down.
If yesterday was that day, then we’ve got more articles coming about the downside being a ‘buying opportunity’.
It’s been the same throughout history
From a positioning standpoint and Wyckoff analysis perspective, under such conditions, one is to pick the weakest market to short and not the strongest (not advice, not a recommendation).
Junior Gold Miners, GDXJ, Bear Market
The last update showed how positions can be de-risked.
There’s always uncertainty but working long enough in the markets and eventually an understanding is formed on how the game is played.
Fake, fabricated or ‘serendipitous’ news articles getting the public on the wrong side, are just part of the game.
In the early session, the GDXJ, is continuing its move lower.
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.
Sales down, earnings down, car prices down, demand collapsing and yet, KMX, goes higher.
Frist off, let’s address the ‘clown show’ that bandies about ‘crash’ this, and ‘crash’ that … ad infinitum.
After you’ve said crash fifteen, thirty times or more on your YouTube channel, nobody’s listening when it really happens.
How about we all (myself included) take a cue from the late Dr. Martin Zweig as seen here, (time stamp 6:40) where he’s reluctant to say ‘crash’ even when it’s on the eve of Black Monday 1987.
Now, back to our update.
CarMax … Strategy
So, let’s review the CarMax situation from a calm but focused perspective.
Strategically, KMX has met the price target identified last October (link here), and has apparently reversed.
The ‘Dead Cat’ Has Bounced
So, was last Friday’s earnings release high of 87.06, close enough to the ’85-area’ as forecasted?
“As the magenta arrow shows, there could be small blip up to resistance in the 85-area before potentially rolling over into a descent that projects to the 4.00, level.”
It took over eight months to get back to the ’85-level’.
What happens next?
Fundamental Forces
It’s been the premise of this site, we’re at the beginning stages of the largest financial, social, and population collapse ever seen (not advice, not a recommendation).
From a CarMax perspective, we have this just out yesterday.
Car lots are overflowing and we’re playing musical chairs with inventory to make it look like something’s happening.
Next, we have a Ford employee writing in, to Jeremiah Babe, saying the Electrical Vehicle Plant is a “ghost town”.
What does that ‘clean energy’ ghost town mean for silver demand? Ah, but I digress. 🙂
We’re most likely just getting started. For a snapshot into what may come our way, take a look at this.
Now, on to the chart
CarMax (KMX) Quarterly Bar
The original chart from October 2022, is repeated below.
Now, the update.
CarMax, KMX, Daily Bar
When looking at the daily, we see we’re in Wyckoff Up-Thrust (reversal) condition.
We’re at The Danger Point®
Just so we’re not one-sided, here’s a bullish forecast for KMX (not advice, not a recommendation).
At this juncture, there’re no plans to go short (not advice, not a recommendation) … although it may not be a bad spot considering all the forces lining up.
An obvious stop level (for a short) would be last Friday’s high of KMX 87.06 (not advice, not a recommendation).
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.
With today’s outside-down (as of 2:43 p.m., EST), that makes it two key reversals for GDXJ, in the past five trading days.
While it looks like the whole herd is focused on the new mania, Artificial Intelligence, back at the ranch, the miners are painting an ominous picture.
Rendezvous With Destiny
The first two-minutes and ten seconds, at this link, are all that’s needed to get the idea of what’s likely to come.
The market recovered (fairly quickly) from 1987 … this time, may indeed be different.
The Elephant Sleeps
Ah, yes. The elephant no one talks about … or more accurately, are afraid to talk about.
Three links here, here and here, show us the elephant may be about to awake.
From the bottom, May 25th to now, is a Fibonacci 13-Days.
Is that important?
Here’s a prior analysis on Real Estate IYR, that shows how Fibonacci can identify the pivot point, trend and/or trading channel.
Now, back to the Juniors.
The mining sector appears to be under pressure. Each attempt to rally is being thwarted.
Compressed view of the channel, below.
The Fed announcement at 2:00 p.m., EST tomorrow, may or may not have any material effect. The sector may just continue lower …. slowly, without much fanfare (not advice, not a recommendation).
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.
First, we’ll review oil; tomorrow, we’ll look at gold.
From an intuitive standpoint, you can almost feel it.
The oil and gas sector has launched to unsustainable highs.
Behemoths like Exxon (XOM) with its 63,000 employees have gone from below $30/share to above $110/share, an increase over 280%, in just two years.
In the history of the equity, going all the way back to 1984, that’s never happened.
Even in 1987, before the crash, XOM was up for the two-year period, a paltry 108%, by comparison.
Now, data is coming in nearly by the day about collapsing demand, layoffs accelerating, and inventories piling up.
The latest from Steven Van Metre, at time stamp 4:25, discusses just how fast the downdraft is, and will be.
Important Note:
Before we leave the Van Metre link above, at time stamp 8:50, the assertion is made of what the Fed will do when slower growth data comes in. i.e., interest rates will be halted or lowered.
Nassim Talib called this kind of thinking “Normalcy Bias”.
The opinion of this site is, it’s a trap. Thinking what happened last time, will happen this time.
Let’s mentally bookmark this post and come back six-months from now to see what happened.
We’re in uncharted territory and other agendas are at work.
Like ‘bread and circuses’, the ‘pivot’ discussion is a distraction … keeping the proletariat placated.
Demand Collapse
We’ve got demand collapsing on a daily basis right in front of our faces and yet, it’s a big mystery (to some).
What’s not known, is how the general population will react to undeniable truth when it finally hits, en masse.
We have a good hint of what’s in store as reported by Jerimiah Babe during the first minute of this report.
Moving on to the Oil & Gas Sector.
Oil & Gas XOP, Weekly
The weekly chart shows the multi-year resistance area that was tested (and rejected) back in mid-June, last year.
The next chart shows we also have a terminating wedge.
Price action has come back to the lower boundary; suggesting a breakdown is a probability.
If we get a breakdown, measured move support is identified at approximately -47%, below current levels.
Strategy & Trading
Obviously, the charts paint a bearish picture.
Over the past week, XOP was covered here and here.
The first link discussed how price action was very close to making a new daily high. That happened the next session (Friday) and indeed, it had Wyckoff ‘spring’ characteristics.
Price action moved higher and closed higher for the day, but it did not post a new weekly high … keeping the bearish case on the table.
A popular leveraged inverse fund is DRIP (not advice, not a recommendation).
At The Close
As this post comes to a close, a quick check on ZeroHedge turns up this: ‘Tipping Point‘
We’ve jumped over ‘recession’ and have gone straight into crisis and depression.
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.
This site does not use Elliott Wave as a primary analysis tool.
However, to be aware of the technique, will at times provide an additional edge … like now.
Number Two:
Once again, gold and the mining sector have become unbearable to watch.
The amount of hysteria, hype and bloviation serves to make this market all about ego. Ego is a four-letter word for the professional speculator/trader.
We’re leaving it alone for now and moving on to the market at hand: Semiconductors (SOXX).
Semiconductors, SOXX
On a Monthly basis, the chart below is the entire trading history for the sector:
The next chart zooms into the area(s) of interest.
This market, the semis, had its most powerful thrust lower in January, for the entire history of the sector.
The following chart is where it gets interesting.
Elliott Wave labeling as shown. If correct, Wave 3, down has just started (not advice, not a recommendation).
Warning:
My former mentor, the late David Weis, who once worked for Prechter, said the approach is a “cookie cutter” (his words) attempt to force the markets into a pre-defined construct.
With that caveat in hand and the understanding the ‘wave’ could fall apart at any time, let’s see what it would project if price action followed the current labeling and structure.
The daily chart shows a Fibonacci projection based on the Elliott Wave labels:
The projections are in percentiles of the first wave distance.
Elliott Wave rules are that ‘Wave 3’ can’t be the shortest wave. If the structure holds, that means Wave 3 (if that’s what we’re in) would go below the 100%, level and potentially to 161.8%, level.
To Trade, or Not To Trade:
This structure was spotted late yesterday … after abandoning the gold sector. There had already been the pre-requisite hype about CPI numbers and such giving the ‘excuse’ for markets to rise.
That meant risk of a short position (yesterday, early today) was low: not advice not a recommendation.
The chart below of leveraged inverse fund SOXS, shows entry points for what is now: SOXS-22-01
Summary:
Taking a cue from the late Dr. Martin Zweig, on his words during this broadcast, he was very hesitant to use the word ‘crash’.
So, this update is hesitant as well.
However, if the forecasted move of SOXX, to the Fibonacci projected 161.8% level (or more) is realized, it’s a decline over – 37%, from current levels.
It would be significant … crash or not.
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 quick review of longer term momentum indicators on the major indices (or ETFs), below:
Technology based indices all have significant downside momentum.
The financial press may have pawned this off as ‘rotation’. Of course, that remains to be seen.
Our view, high yield tells us something much larger than a sector rotation’s occurring.
It’s possible, the most debt (interest rate) sensitive indices are reversing first which could be a sustained, long term reversal.
The HYG weekly chart pattern is similar to the prior reversal (magenta ovals). This time however, MACD has spent over nine-months in a divergence and has crossed to the downside.
There could be a new high … low probability but it could happen (after all, it’s at support). If it does, weekly MACD may post an even larger divergence.
In response to the HYG reversal, we’re watching (and are short) the biotech sector, IBB (not advice, not a recommendation)
Of the three noted above with negative momentum, IBB is the weakest. Last Friday’s action has tentatively confirmed the resistance areas and trading channel reviewed in this update.
Friday’s IBB lower action was nearly imperceptible but it was there. Major reversals can happen this way … a little at first.
Wyckoff said it in 1910, ‘It’s as if the weight of a feather can determine the next direction’.
We’ll see if there’s follow-through to the downside on Monday.
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.
Of course, it’s all part of the plan but that’s a topic for another time.
What’s shown in J.B.’s video(s) is that one after another, commercial properties are boarded up and fenced off.
One might think it’s only progressive utopia California that’s having a rough time; taking a look at comments to his videos shows otherwise.
Just one example taken from the video link:
“Even if the U.S. lifted all lockdown restrictions 100% TODAY, I still think for many companies, its too late.”
The economy is not coming back … not in our lifetimes anyway.
No matter what happens, re-building will take many decades. Even so, the destruction has to be completed first.
We’re nowhere near downside end (economy, markets or otherwise).
On Thursday you would’ve thought from the news, we just collapsed by 50% or more. In fact, the S&P (SPY) was only down -2.41%.
Think about what happens we get the hit … that does not come back.
As early as May 12th of last year, this site began to note the similarities of the markets to August of 1987. In retrospect, that post (and the ones that followed) seemed a little premature.
It’s a different story now.
Markets even more extended; bond rates higher.
Throughout the years, going back to the early 1900’s, the professionals always preferred down markets. Profits (and fortunes) can be made much faster and with more reliability.
Fear is much easier to gage (on the charts) than greed.
With that in mind, we can look at real estate with a clear head and assess the opportunities.
It turns out, not only has IYR got itself into a terminating wedge, it’s doing so at Fibonacci time frames.
During the past six-weeks, my firm (link here) has been positioning in and out, and back in, several times using short fund DRV (not advice not a recommendation).
Just yesterday, before IYR broke decisively lower, that DRV position was increased to its maximum level thus far.
Obviously, a new high in IYR is not anticipated. The reason for selecting real estate as a strategic short (unlike the LABD swing trade) is for the downside potential.
Inverse leveraged funds work best during a sustained, directional move. It remains to be seen if DRV was a good selection; not only for a trade vehicle, but for the anticipated collapse in real estate.
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® 