Bonds … Kabuki Theater

Early Session

What Is The Bond Market Saying About Itself?

With all the media press and hype, you would think bond yields have just spiked above 15%.

We have to remind ourselves that everything, that is, every move, every press release, every interview, is controlled.

Controlled for the purpose of “deception” as Livermore put it during an interview with Wyckoff in 1921.

With that in mind, who stands to benefit from the sharp move lower in bonds?

Seems like the obvious answer is, the short-term shorts and the longer-term bulls; especially if the hapless ‘hedge funds’ have jumped on the band wagon to short the market.

Bond (TLT) Analysis:

What Is The Market Saying About Itself?

The sharp move lower over the past four trading sessions, has likely cleared out the weak hands and emboldened the shorts to short some more.

The problem is (for the bears), we’re at a 50% retrace of the March 18th low. In addition, price action has just penetrated well known support.

That puts the bond market (TLT) in spring position.

We can see from today’s open, TLT is gap-higher and now, just below the support level.

We’re at the danger point, where the risk of going long is least (not advice, not a recommendation).

Because the four-day down-draft was so swift, don’t expect TLT to launch into an instant and sustained rally.

There may be quite a bit of testing (if and) before this market heads higher.

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.

Biotech Reversal, Repeating Trend

9:45 a.m, EST

Price action itself defines the trend

The unmarked hourly chart (above) of inverse fund LABD, shows the location of the last update.

That update called for LABD to reverse higher; based on thrust action of the market itself.

Soon after (magenta arrow), LABD pivoted higher.

The right side action has a familiar repeating trend:

The chart below is a compressed version.

The repeating lines have been added. Arrows show contact points:

Strictly as a courtesy, daily chart of LABD is below with notations of buy and sell (not advice, not a recommendation) for my firm’s main account.

A good many that monitor this site have probably become bored with biotech … just as they did with Steven Van Metre’s analysis of bonds (back at the lows).

Van Metre is providing an excellent service. True, he probably has people moving their accounts to him. He’s running a business after all.

However, that does not negate the fact, he’s one of, if not the only one saying that we’re about to enter a deflationary environment (if not just temporally); complete opposite the conformist (and media led) crowd of hyper-inflationists.

Even Johnny Bravo has said, ‘hyper-inflation will come … but when?’

Summary:

The short positioning in biotech (via LABD) continues: Not advice, not a recommendation.

Rumors are swirling now about power outages and cyber attacks with major corporation website shut-downs.

Does anyone really want be to playing around with long positions when torpedoes (to hit the market) are already in the water?

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.

‘Read My Lips …’

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

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.

Economic Collapse … The Model

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

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.

Garbage In … Garbage Out

10:49 a.m., EST

Another day spent digging in the trash

This morning’s perusal through the usual suspects of finance, leaves the feeling you’re sifting through garbage.

Every once in a while, like yesterday’s post, there’s something useful.

Most times, not.

Today is no different.

Here we have an article about the ‘bond bloodbath’ and how inflation is not transitory.

Instead of falling into the trap of contesting the current false narrative, we’ll take a different approach.

How can the constant stream of financial nonsense, lies and miss-direction, be put to use?

Since the article linked above is about bonds, we’ll use that for our example.

The Bond Market (TLT):

First, the David Weis training video (linked here) has been discussed many times over the years.

We can’t make recommendations but we will make a suggestion; that is, whatever the video costs at this point is well worth it.

Our TLT market entry technique (below), is taken from that video (not advice, not a recommendation).

We’ll start with an unmarked chart of TLT. The ‘bloodbath’ referred to in the link above, is yesterday’s down-draft.

Steven Van Metre has already laid the fundamental groundwork (for about a year) on why bonds will rally.

We’re there now but the market’s not going to let anyone get positioned long easily.

The next chart shows how the Weis technique can be used to get aboard the rally.

Yesterday’s so-called bloodbath, is really a trade entry set-up.

Notice how the market does not come back to the ‘entry’ levels. This chart fits the Weis example to perfection.

The bond market’s signaling there’s something very wrong with the ‘reflation’ or ‘re-opening’ trade.

The reflation, re-opening does not exist.

The economy is not coming back.

Summary:

It took over twenty years of searching to stumble across the Weis video. As with a lot of things in life, it was almost by accident.

After watching him dissect the ‘Apache Spring’ (APA) trade, it was obvious the search for ‘truth’ had ended; the education was about to begin.

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.

Biotech: Technical Force

2:46 p.m., EST

LABD, Force Index Divergence

Sentiment, Volume, Price

Sentiment can’t be seen on the chart. One can guess but it can’t be measured directly.

Sentiment change comes first.

That change in turn, results in a change of volume, i.e. ‘commitment’.

Then, after commitment dissipates, price is next.

That looks like the current situation with biotech and specifically inverse fund, LABD.

In what may be an idiot or genius move (depending on outcome), the short in biotech SPBIO (via LABD) has been maintained throughout the current down thrust; not advice, not a recommendation.

The reasons for that decision have as many layers as the proverbial onion. Not the least of which, is a market break anywhere from 20% to 50% (in our view) can happen at any moment.

‘Never happened before’, one might say.

Oil futures in their entire history have never gone negative before, either.

Bonds, in their entire history have never been shorted by four-standard deviations before, either.

A world-wide coordinated push to euthanize the entire population has never happened before, either.

Margin debt and valuations have never been higher before, either.

Underlying liquidity has never before been removed to the current extent, either.

So, we each have our own reasons.

The firm’s main account (not the Project Stimulus account) has drawn down about – 13%, on the current short position.

A core position has been maintained but small amounts have been removed and added based on price action.

When the anticipated gain, is high hundreds of percent and maybe above 1,000%, the draw down above, looks acceptable considering the (potential) opportunity.

On to the chart:

The daily chart of LABD, shows both net downward price action and thrust energy are dissipating.

Note the ‘Force Index’ scale has been accentuated to better show the divergence.

We’re looking for price to move back higher to test support/resistance areas.

If or when it does, the plan (as has been from the beginning) is to continue to add LABD until volatility makes it prohibitive.

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.

Gold, Dollar: In Tandem

Dollar Rally, Gold Rout

Markets Remain Inversely Correlated

First, let’s start with a review of the dollar reversal.

Back in early May, this report pointed at the possibility for a bullish set-up in the dollar.

That type of head’s up gives one time to investigate the correlations.

Correlations like, ‘is gold still inversely correlated to the dollar (and bonds)?’

Over the weeks as the set-up unfolds, confirmation or negation can be added by observing price action.

By the time we get the dollar penetrating support levels, we have gold at interim highs.

In fact on June 9th, the day the above ‘penetration’ report was posted, gold (GLD) had already reached its peak and was in a reversal.

Five days later (before the major down-move), this report was published on gold.

Therefore, at this juncture, we’re still inversely correlated.

So, what does that mean?

The updates on the dollar have proposed, since the bullish divergence (now turned rally) is on a longer, weekly time frame, the ensuing move could have the potential to carry the index UUP, to the top of the trading range shown here.

Then, what happens to gold?

If the negative correlation remains intact, gold gets whacked.

The weekly chart of GLD (above) has the index closing right at the Fibonacci 38.2%, projected level.

Wide bars tend to get tested. There could be some kind of rally in the coming week but it’s not required.

The Fibonacci projections highlighted as the orange bars, go all the way down to 161.8%. That’s equivalent to GLD at ~ 118.65, or the futures market somewhere around $1,300 – $1,350.

With the Dow 30, (DIA) penetrating and closing below the 336, support levels on Friday, we have a Dow Theory Sell Signal (not advice, not a recommendation).

The markets appear to be rolling over.

The last market reversal in February – March, of last year, had GLD dropping over – 14.5%, in two weeks.

Fast forward to now; GLD, is already down over – 15.2%, from its August 2020, highs.

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.

Moderna: Reversal Review

‘Reversal at hand’ said the prior update

Reversal still imminent?

MRNA has pushed above resistance on declining volume (shown above) . The next chart has MRNA in a terminating wedge pattern:

Price action this past week has just contacted the top portion of the wedge.

MRNA is the fifth-largest cap equity in the IBB index. Its market moves have a definite effect on that index.

IBB, shown below:

On Friday, the market eased back a little. Will it come back to test the resistance area next week?

There’s no doubt about the wide high volume bar. That day (last Monday) posted the highest daily volume in four years.

Wide high-volume areas are usually tested.

It just so happens, that wide area is below resistance.

To test the wide bar, price action would need to move below the resistance area. Doing so, would put a Wyckoff ‘up-thrust’ into play.

The next chart shows another resistance area not easily discernable:

Although somewhat hidden, there’s another resistance level that for now is putting a limit on the upward travel of IBB.

Summary:

MRNA’s at an extreme. The previous update linked to a site which shows insiders bailing out in the tens-of-millions of dollars.

The bond market, with its upside breakout is not confirming the ‘recovery’ narrative.

The dollar is reversing as well.

Gold and the miners have stalled; potentially reversing.

The narrative is shifting as the media (all controlled don’t forget) has decided on its sacrificial, e-mail lamb.

Don’t worry, nobody’s going to jail. It will just be another distraction to keep the mask wearing masses from getting prepared for the fall.

As a reminder, this is how they think; ‘Just doing the right thing’ Almost like ‘Just following orders’.

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.

Dollar Rally

Wasn’t the dollar supposed to crash … go to zero … implode?

This is the flip side of the hyperinflation narrative.

Dollar implosion like hyperinflation, not happening.

Way back in 1921, Livermore said to Wyckoff that his assessment of the markets was, ‘it’s all about deception’.

Nothing has changed.

It’s in the best interests of those controlling the narrative to have as many as possible (always) on the wrong side of the trade.

We haven’t posted this link in a while … the video keeps getting deleted but re-appears every so often. This is how it really works … Period.

Note the date stamp on the comments. The video’s at least 13-years old and it’s still relevant today.

So, the dollar’s in a rally.

Not only that, momentum indicators, MACD, on the monthly, weekly, daily, all point higher. It’s in a rally and a sustainable one.

It’s completely opposite the accepted narrative.

You can feel the tensions building.

Bonds could be reversing but have already pushed rates high enough (long enough) to choke-off critical sectors of the economy like here and here.

Now we see the dollar has bottomed as well.

It looks like a strong multi-month (or year?) rally. Correspondingly, gold is weak. The overall markets are stretched to ever-livin’ extremes; never before seen.

Whenever this baby pops, try logging on to chaos, or exit any position (except maybe for the long bond).

Our approach then (not advice, not a recommendation), is continue work on positioning short. So far, the ‘project’ is taking small hits in those attempts. We’ll see how basic materials (SMN) works out today.

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.

Sentiment Shift

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’.

Has all this fed into the markets?

Let’s take another look at the S&P 500 (SPY), analyzed on the 15th.

At that time, we stated the SPY’s at the danger point.

The original location of that analysis is the orange arrow. Indeed, the SPY continued a brief rise before reversing.

Downward pressure (thrust energy) has increased.

Unless it’s a flash-crash, markets do not go straight down.

The SPY shows a nascent reversal. Price could come back to test resistance (black line) or continue to decline from here.

It’s important to note the overall market position (of the large indices) as they affect everything else.

With that, our focus remains on biotech (IBB) as it appears to be the weakest of the major sectors (not advice, not a recommendation).

Sunday futures open in a few hours.

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.