11:40 a.m., EST
Potential Head & Shoulders
The hourly chart above shows the potential.
A pull-back to the hourly low (434.07), gives additional confirmation to the nascent reversal.
In the biotech sector, SPBIO is currently pulling away from the 38% retrace discussed yesterday (LABD higher).
Stay Tuned
3:43 p.m., EST
Recession’s over … Depression starts
Boots on the ground update from Dan at ‘I Allegedly’.
Drastically reduced economic activity at premium retail locations.
From Uneducated Economist: There’s news the lumber mills are going to curtail production … right in the middle of summer … the high season.
Couple that with the strange ‘going’s on’ reported at this link concerning the database that’s being monitored.
Then, we have another strange ‘coincidence‘ that takes place every hundred years like clockwork.
Which brings us to the sector at hand: Biotech
SPBIO Analysis:
We’ve taken the hourly chart of biotech SPBIO, and inverted it; shown below:
Price action pushed through the spring set up conditions noted in the last update.
SPBIO went on to retrace to the 38%, level … where it is now.
Looking at the price structure of inverse fund LABD (not shown), the downward thrust energy on a daily basis has declined significantly.
That analysis to be forthcoming.
Stay Tuned
1:57 p.m., EST
South Africa Food Lines
The video at this link paints the picture.
Let’s use the images in that video and get deathly serious for a minute.
Imagine yourself walking up to one of the people in line, asking this rhetorical question:
“How’s that stack of silver?”
It’s no secret to anyone that’s been monitoring this site, we’re using the Biblical model (Genesis 41) for the current environment (not advice, not a recommendation).
That is: Corn and Grain (food) first … then gold and silver.
At first it seemed like a quaint alternative to the non-stop hyperinflation (no thought required) rants to continue ‘stacking’.
Now, it’s different. Now, it’s getting serious.
You won’t see that kind of line outside the bullion dealer.
Moving on to the markets at hand … once again, biotech:
LABD (SPBIO) Analysis:
After yesterday’s LABD behavior, the logical thing to do would be to put the stop at the session low.
After all, that low was just below the lows of the previous day. Good to go, right?
Wrong.
It’s wrong because that’s what everyone would do. It looks like from today’s action, that’s what everyone actually did.
Recall that price action is automatic.
If there are too many stops all bundled up at one location, the orders will (automatically) be generated to go that that spot.
LABD price action penetrated the daily lows at a deeper level early in the session.
In the process, it penetrated well defined support which in turn, puts LABD, in spring position.
That’s where we are now.
Springs are usually tested.
If price action can hold above the support boundary, expectation is for a rally to at least the top of the range: ~ 24.50 – 24.75
Stay Tuned
2:00 p.m., EST
Force Everyone Out
Then, Go
With each adverse move (for the shorts), the case for biotech downside reversal builds.
You would think, with announcement of lawsuit field in Anaheim CA, stating 45,000 are confirmed dead (via ‘official’ sources) from injections, it would have caused a massive drop.
There was an initial gap-lower open for SPBIO with LABD, opening higher … but then what happened?
Price action went all the way down (for LABD) to the prior session low. That low was then penetraed by just 0.04-points.
That’s just enough to clear out tight stops, novices and short-term traders; all in one shot (no pun intended).
The fact LABD price action immediately rebounded from the lows, now trading higher, indicates possible trend line verification.
LABD (SPBIO) Analysis:
The LABD daily chart (above) has potential right-side trend verification happening now.
Price action cleared out the stops and hit the support/resistance boundary (dashed magenta line) simultaneously.
The weekly chart below, has one potential move:
Many “Ifs”
If we’re verifying the right side of a trend line and if that trend line is actually part of a channel and if LABD price action is pivoting to the upside, then we’ve got a potential trade (not advice, not a recommendation) that might culminate during the third week of October when markets typically bottom out.
So, we’ve got three “ifs”, one “then”, one “potential”, one “trade”, one “might” and one “typically”.
That sounds reasonable 🙂
On the plus side, there’s not yet been a serious upside move in SPBIO, that would negate the downside potential.
Fundamentals are coming out by the day if not the hour. Whether or not it’s all controlled opposition is unknown to us in the proletariat.
We’re not counting on legal action but price action itself.
That action continues to say that biotech is sub-dividing lower with LABD higher.
Stay Tuned
Work and think in isolation
Intuition does not ‘collaborate’
If you’re serious about your growth with market analysis and trading, at some point in the journey, you’ll discover this fact:
The most successful and effective market speculators operate alone.
Livermore had his office with the ticker, ‘board boys’, and not much else.
Wyckoff (from his autobiography) refused over and over the overtures of his wealthy clients to establish a more personal relationship.
The late David Weis was the same; managing his own account.
One difference with him; he provided a mentoring service that passed on his valuable insight.
It was a steal of a price (back in 2011) … just $1,500.
Personal Anecdote (being mentored by Weis):
It was April, of 2011:
As Weis interviewed me on the phone, asking all sorts of questions about my background (engineering), my parents (my late father, a Yugoslav national, shot by Germans in an attempted execution during WWII), and my trading objectives, it became clear to me, I would pay whatever price necessary to gain an audience with him.
This all took place before his website was complete and before his book was published. It was sort of a ‘golden time’.
Stretched Growth:
Weis traded the futures markets. If I was to be mentored by him, I would need to get up to speed and trade futures as well.
I knew almost nothing (except they were highly leveraged) about those markets. However, I was determined to learn very quickly.
During the phone interview, which lasted maybe forty minutes to an hour, he did not mention (and I did not ask) the cost of his services.
As the call progressed, I was literally getting sick with anticipation.
Coming to a close, almost absentmindedly, he said: ‘It’ll be $1,500’.
I fully expected him to say, and would have gladly paid $5,000 or more … which was the going rate for a typical trading course.
He then ‘suggested’ that I open a futures account; our mentoring sessions would start the next week.
Fast Track:
After that call, three things happened in quick succession.
First: A check (he was old-school) was mailed off to him in Boston so that it would clear before the next week.
Second: I contacted TradeStation and got their futures paperwork to open an account. That happened quickly and $15,000 (an amount suggested by Weis), was wired to the account.
Third: Buy the time of the first session, I already had the futures account set up and had determined what markets I would be trading: The LIFFE mini-futures (now part of ICE Futures Europe) for gold and silver.
On The Fly:
One last thing about trading futures and learning quickly.
I noticed about two weeks into trading silver, the volume on the contract I was in, started to drop off.
I did not understand why the liquidity was drying up … that is, until I checked my e-mails.
Turns out, I was about to ‘take delivery’, and pay $37,000 for a bar of silver if I did not exit the contract (that day).
The entire time with Weis was a growth experience. Very painful most of the time as knowledge had be acquired on the spot.
During our sessions, I would have the phone to my ear and be feverishly taking ‘screen shots’ of his computer (via gotomeeting,com) as he progressed through the session.
This link is probably as close as one will come to a typical mentoring session.
No Group Consensus:
Going to the link and watching for even a few minutes, it’s obvious this type of analysis is in a class of its own.
Nowhere in the video does he mention P/E ratios, Sales-to-Book or any number of useless metrics.
Deciding to pursue this type of trading, will of itself, separate you from the crowd.
The mainstream financial press will never present this level of detail. The general pubic does not have the intellectual capability or discipline to really get down and craft this skill.
Of course the financial media, YouTuber’s and the like, are all too happy to cater this (mediocre) crowd by showing their supposed prowess on dissecting financial reports and/or pontificating on the latest Fed speech.
Little does the public know, this type analysis (fundamental metrics) is just a ruse; a distraction promulgated over the life of the markets to distract and disable the masses.
The fact that ruse keeps going, is proof in itself of its effectiveness.
Which brings us, once again, to biotech.
SPBIO (LABD): Analysis
In this case, which could be one of a kind in history, the fundamentals are important.
Those in the biotech sector have intentionally (depending on whose data is used) fatally poisoned millions if not billions.
Their natural immune systems have been forever destroyed and their life expectancy drastically shortened.
Even so, this fundamental backdrop must not cloud interpreting the market behavior at hand and the Wyckoff analysis.
We’ll start as Weis does in the video link, with an un-marked chart. Daily close of inverse fund LABD:
Next we’ll show how the right side action is alternating its behavior:
At this juncture, the market is not able to retrace.
Price action from the last intermediate low in late June, has formed a double, then single, and then no bottom.
Adding in the repeating trendline study, LABD is currently near a contact point on the right side trend:
Price action itself points to more downside for SPBIO (LABD higher).
With the overall markets closing poorly on Friday, the implication is for lower action in the coming week.
Consumer All Done:
The post on Friday, showed how the consumer is literally spent.
About an hour later, Steven Van Metre came in with additional details.
Then, couple that with Dan’s (iAllegedly) assessment: “The Party’s Over”; the pressure continues to build.
We might take the example of lumber futures as a model for upcoming price action; essentially, straight down -66.3%, in 48 trading days.
Wistful Conclusion:
David Weis is now gone (passed away last year).
After listening to his voice once again, I have let it personally admonish me to remain focused and diligent.
Even a decade after our mentoring sessions, with focused effort, the search for mastery is never ending.
To borrow a quote from Oswald Chambers: “One must determine to be limited and focus their affinities.”
We’re at a critical time in world history and that’s not overstated.
Our conditions have brought so many cowards to the fore.
In a way, it’s a tremendous public service.
It’s clear to see who is leading and who is cowering in place.
If anyone has a hope of surviving (even prospering) in this environment, for some it will be taking control of their own market decisions; separating themselves from those who want them to remain ignorant.
Stepping out into the raw edge of life, has no guarantee of success.
However, what is guaranteed, is stretching of oneself into a new level of thinking, experience, and wisdom.
That, is its own reward.
Stay Tuned
3:21 p.m., EST
No More High Prices
This article, just out from ZeroHedge, says ‘consumers’ are in a revolt.
No more high prices.
Buying plans for the major items, housing, auto, appliances has declined dramatically.
One chart, linked here, shows consumer complaints about high prices are the most since the data started … 1961.
The reality is the retail consumer has come to the end of the rope.
To loosely quote Von Mises; ‘If you don’t voluntarily get your spending under control … the market will do it for you.’
To quote another financial source, Steven Van Metre; he has discussed for months, that high prices will be rejected. The economy will contract and bond prices will rise.
Bonds have indeed gone up in anticipation of contraction; or forecasting an outright collapse.
Throw into the mix that we’re going to have some kind of ‘fatality event’ this coming winter; for sure, there won’t be much demand for high priced items … just from the contraction of the population itself.
Which brings us to biotech (SPBIO).
SPBIO (LABD) Analysis:
The unmarked chart of inverse fund LABD is first (just to give perspective):
Next we’ll show that LABD has or is testing support and at the same time, confirming a trendline:
Biotech is the downside leader … sometimes tag-teaming with gold but for the most part it’s biotech.
Positioning:
It’s no secret I have positioned my firm short this sector in a big way since April of this year (not advice, not a recommendation).
That position has been adjusted over the months but has been steadily increased since the intermediate low on June 28th.
Since that low, the position has been increased six times (including yesterday) and may also be done so today.
Summary:
Once again, we’re heading into the weekend. The S&P (SPY) has just printed ‘out-side-down’.
Anyone still want to hold long the market?
Stay Tuned
1:44 p.m., EST
South Africa shows us how it’s done
‘Hey J.B., when’s the collapse?’
That’s a comment often seen on any number of Jerimiah Babe’s updates; openly mocking his doom and gloom assessment.
Whether he’s at the local homeless camp in Los Angeles, or in his home next to the golf course, the question remains the same;
‘J.B., When’s the collapse?’
Sometimes his response (if he’s at home) is to turn his head to the window and say “Have you looked outside?”
A good number of American’s have become so pathetically weak, ignorant, and just (to overuse the word) plain stupid, they expect to sit on their newly built patio deck (using last year’s stimmie check) and observe the fall of the U.S. from the comforts of their own back-yard.
Of course, there are some (including this author) who are first generation Americans. Their parents and grandparents emigrated (or escaped) from communist countries.
Those people do not have to ‘wake up’; they were never asleep.
Coming Attractions:
South Africa gives us the model for what’s in store … at least for sections of the U.S.; probably starting first with the blue sates (we’ll see).
You might say, it’s already happening in Portland.
One news item of note shown in this report from South Africa, is neighborhood patrols.
If that’s coming our way, then we’ll need to get outfitted (if not already). Here’s a good place to start.
All of which, brings us to the markets.
Bonds (TLT):
Yesterday’s update showed how the so-called ‘bloodbath‘ was actually a set-up to go long (not advice, not a recommendation).
It didn’t take long for bonds (TLT) to give a Weis method ‘buy signal’. That happened at the open today.
The bull move in bonds does not confirm the ‘re-opening’ hype. That in itself, should be all that’s needed to make decisions.
It is interesting to note; on sites like ZeroHedge, there’s no talk whatsoever that biotech has (already) reversed and is leading the way down.
As of this post, inverse biotech fund LABD, is up about 38%, from its lows of late June. It appears poised for yet another breakout; lower for SPBIO and higher for LABD.
Stay Tuned
Charts by StockCharts
2:46 p.m., EST
Biotech SPBIO, Down
Inverse LABD, Up
Inverse biotech, LABD above, is confirming a pivot.
The magenta arrows show contact points morphing into a pivot that has two more contacts.
The new trendline was copied, then pasted to the far left of the chart.
It’s clear the new (pivot) trend is identical to the one created when LABD bottomed out this past February.
While the overall markets (S&P, Dow, COMPX) are still showing green, biotech looks like it has started the next leg down.
The original short position via LABD, has remained intact (not advice, not a recommendation) and has been increased five times (including today) since the beginning of this month.
In our view, biotech’s signaling the potential for a very dangerous situation.
Biotech’s headed down and we’re already short; not advice, not a recommendation..
As Livermore said a hundred years ago, ‘surprises tend to happen in the direction of trend.’
Stay Tuned
11:43 a.m., EST
When the break comes … it’s not coming back
Nearly 100-years ago, Wyckoff, stated:
‘If you can’t completely ignore the news and the financial press, you will never be successful in the markets’ (emphasis added).
In line with that, we have this: The very first sentence from this article out of barchart is questionable to say the least.
First:
There is no rapid ‘re-opening’. There never was. There is no ‘pent up’ demand.
Massive credit card usage shows the U.S. consumer has been decimated; using credit just to survive.
It should be (but somehow for some, it’s not) obvious we’re in a controlled demolition of the economy (including the food supply) on a world-wide scale.
Second:
Price increases are the result of supply chain (also, controlled demolition) shutdown not inflation.
Uneducated Economist has probably done the best job of ‘boots on the ground’ work to completely dispel the inflation false narrative.
He called the current and now waning lumber price spike two years ago. That’s how you know who to trust or believe. Take a look at their past analysis and see how it ‘aged’.
Third:
The U.S. population collectively, has never experienced real hardship. Those who made it through the Great Depression have all but died off.
There is no one around to give said population a swift kick in the pants and tell them to ‘suck it up’.
Northman Trader
Sven Henrich has come out with an excellent market update, linked here.
Towards the end of his analysis he states; ‘when the break comes, it will be quick, deep, keep going and most (if not nearly all) will be psychologically unprepared.’
Which brings us to biotech.
LABD Analysis:
Biotech SPBIO, is back as downside leader: Down just over -25%, from its highs in February, this year.
The daily chart of (inverse fund) LABD is below. The market itself is showing us it wants to follow the repeating pattern of trendlines (not advice, not a recommendation).
If the entire structure (from the February low) is actually a trading channel, it’s hard not to overuse the word ‘massive’.
Non Confirmation:
As of this post, the Dow, the S&P and the Composite are unchanged to slightly higher. Yet biotech SPBIO, is down -1.2%.
We won’t know until it’s all over … but it looks like biotech could somehow be the catalyst (along with the dollar and gold?) that precipitates the final reversal in the overall market.
Stay Tuned
12:23 p.m., EST
Wells Fargo: Just the start?
The short answer is probably yes; but that’s only one problem.
Everyone’s subject to ‘normalcy bias‘ as Nissam Taleb puts it; Today’s like yesterday and tomorrow will be like today.
The news on Wells Fargo shows how quickly that can change.
Here’s a YouTube link; one man’s assessment on what happens now.
He proposes a ‘ripple effect’.
Events have been set in motion; not necessarily immediately but it has started nonetheless.
Market Positioning:
So, here we are going into the weekend.
Does anyone want to be long the market at this point (not advice, not a recommendation)?
There must be some that do as we’re still at elevated levels.
The trade approach implemented on this site (i.e., positioning short), takes into account and actually plans for a ‘disconnect’.
Only the inexperienced or naïve think (at this time in market history) they can get out as easily as they got in; i.e. day and swing trading.
Analysis: SPBIO (LABD):
We’ll start close in first and look at the hourly LABD:
Price action has come back to test the boundary (blue line).
As frustrating as it might seem (and it is), this is normal market behavior. The market itself has to define who is in control; bulls or bears.
It’s never ending.
That’s why a case has been built on the fundamental side; why biotech is subject to a massive implosion.
That backdrop, is being supported (little by little) with price action and thus, helps keep the mind focused.
If we pull out to the daily, we see the familiar trend-line(s):
We’re at another danger point. Price action can go either way.
If LABD pivots higher from here, it’s one more confirmation that we’re trending higher (SPBIO, lower) into our October-exit timeframe (not advice, not a recommendation).
Stay Tuned
The Danger Point® 