It did not take long to be proven wrong. DUST positions (in both accounts) have been exited.
Stated before, a 23.6% retrace is a rare event. Looks like that’s holding true as price action for GDX now points to the 38.2% area.
That corresponds to GDX trading to around ~ 38 … a long way to go higher.
Biotech, shown below is just 0.69-pts shy of target with price action (as of 10:34 a.m. EST) coming back to test the early session lows.
It’s traders discretion (not advice, not a recommendation) to determine if today is the day IBB finally reverses and confirms the bearish weekly MACD divergence.
At this point, daily action has quickly retraced from the high of 149.31
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.
In the pre-market (8:52 a.m. EST) action continues to grind higher. Both the Dow and S&P have posted new highs thus negating the Holiday Turns scenario … but not by much.
Important to note is each market continues to post on the underside of a long-term trend-line. The Dow chart (DIA) is farther down this post.
Also added to the chart is the dashed trend-line underneath the recent price action. A wedge is being formed; typically last stop before reversal.
In other markets, looks like Biotech may continue higher but along with the others, action appears labored.
The short position could be stopped out at the open.
This area of price action is where cost of being wrong is least. We’re at The Danger Point.
Update: 9:04 a.m. EST: Both AMGN and MRNA have now posted lower in pre-market.
Stopped out does not mean there’s no opportunity. The bearish MACD divergence is still there.
If IBB continues higher, the original ‘150’ target is back in play.
The market extremes are still there: Bonds and the Dollar are short the most in history. Stretched all around.
It’s not unreasonable to expect several attempts to position short.
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.
Instead of reversal in the overnight, gold went higher.
Keeping with the potential down-trend theme, we’ll pull out to the next larger time-frame; the weekly.
The 23.6% retrace level, is approximately 172.60 – 172. 70, when measured on the weekly chart. Pre-market action in GLD (as of 8:55 a.m. EST) is at 172.40 – 172.60 range.
So, we’re there.
This is a good example of price action coming back to test wide, high-volume areas such as posted last week. It’s what markets do.
From a trading standpoint, the DUST position could be stopped out if price action remains at this level to the open.
Not a problem. Every trading action results in creating another data point for a future entry.
Moving on to Biotech (IBB):
Using LABD (3X Inverse IBB) as the high-volume proxy, it’s oscillating in a narrow range and essentially unchanged.
Separately, David Quintieri at the Money GPS, comments here, that he’s being chided for not giving financial advice and not indicating which stocks to buy.
In addition, Steven Van Metre, in this report states the Dollar and 30-Year Bonds are shorted to unbelievable, historic extremes.
He also states that ‘when the market finally reverses, it’s going to be violent.’
The wipe-out, when it comes will likely be on several fronts.
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.
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.
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.
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.
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.
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.
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.
It’s the heavy hitter. If we decipher what’s going on with it, then we can trade biotech for (potential) profit.
The chart shows price action began to retrace off the lows for the week. In doing so, it created a possible neckline.
The 38% retrace area, marked with the dashed line, also shows it’s a juncture between weekly bars; the circled area.
That’s a trading tip … watch the circle.
If price action gets to 38% and stalls, it shows weakness.
Our interest is to look for shorting opportunities. Specifically, via the 2X Inverse Biotech, BIS.
For years now, except for energy (nat-gas) and commodities (corn, wheat, et al), markets are being worked from the short side.
Steven Van Metre presents an excellent case for a deflationary impulse first before there’s any inflation.
The ‘macro’ as he calls it, provides a backdrop for what’s really going on.
For now, the action (not advice, not a recommendation) is to watch AMGN play out. If the trading is choppy, overlapping and laboring into the 38% level, then we have our answer.
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® 