Category Archives: Bonds

Keep Eyes on Bonds

September 19, 2024 By in Bonds, Federal Reserve, Interest Rates, TBT, TLT 1 Comment

They’re Calling The Shots

Just like that, bonds reverse; rates higher (not advice, not a recommendation).

Now, it gets interesting.

The mainstream’s already covering; within hours (if not minutes) of the Fed’s move, saying if the economy ‘improves’ rates will have to move back higher; you can’t make this stuff up.

Rates are already ratcheting higher (chart below).

Long Bonds TLT, Daily Close

The pattern is clear; terminating wedge (not advice not a recommendation).

Pre-market action (as of 8:42 a.m., EST) has TLT, trading down (rates higher) – 0.84 pts or – 0.88%, giving further weight to potential (continued) downside reversal.

Fed Calendar

Looking at the Fed calendar, link here, it’s a very interesting date; ‘the day after’ November 5th.

Let’s see if the ‘rate cut’ is immediately reversed (not advice, not a recommendation).

Stay Tuned

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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®, trade mark: No. 6,505,279

Biotech … Breakout or Fake-Out?

September 17, 2024 By in $SPSIBI, Biotech, Bonds, Federal Reserve, Interest Rates, LABD, LABD-24-17, SPBIO, TLT, XBI, ZeroHedge 2 Comments

The Bull & Bear Side

The last biotech trade (going short) was back in August, as LABD-24-17.

The trade posted a -3.6%, loss and from then, the decision was made to stand aside.

The sector was not validating its up-thrust (bearish) set-up discussed many times prior; price action itself, showed something else at work.

Fast forward to now.

At this point, we’re at (upside) resistance and threatening to break out; biotech has made the news, link here.

Biotech XBI, Weekly

“What do you see?”

Shown below is a wedge formation, the likely premise for all the hoopla in the linked article above.

Also shown, we’re just ticks away from a Fibonacci 38.2%, retrace of the entire move; February 2021 highs to lows, May of 2022.

Possibly as important, the volume (magenta arrow); where is it?

Where’s the volume (demand) for this underperforming sector, rising into some kind of (potential) breakout?

If there is a breakout, which could be as soon as tomorrow’s Fed announcement, price action will be monitored closely.

Bond Digression

The Fed does what the bond market tells it to do (not advice, not a recommendation).

From the last report, the potential downside reversal, was negated and bonds (TLT) are at their own breakout (up-thrust) level.

That being the case, probabilities favor a rate cut; finally, after 1.5 years of mainstream jawboning on the topic.

Back to biotech.

If we do get an upside breakout and it fails … we’ll cover the downside potential at that point.

Stay Tuned

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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®, trade mark: No. 6,505,279

Silver & Solar

September 7, 2024 By in Artificial Intelligence, Bonds, CDE, Federal Reserve, GORO, Great Depression 2.0, HL, Interest Rates, NEXA, PAAS, SLV, Solar Power, TLT, ZeroHedge 2 Comments

Looks Like Demand Has Evaporated

Those who ‘drank the Kool-Aide’ about silver being bolstered to astronomical heights because, you know, ‘solar energy’, must be a little upset by now.

Just like the fabled ‘interest rate cut’, it’s not happening.

Although for interest rates, we’re just shy of two weeks away to find out; meanwhile, since the last report, the bond market has been bid up again, pushing rates down (again), so, we’ll see.

Back to silver.

We have yet another so-called ‘green energy’ company going bankrupt. That’s not so much news, except for this statement from the report (paraphrasing):

‘Solar demand has declined across the entire industry’

Um, it’s called an economic depression (not advice, not a recommendation).

While we’re talking collapse, let’s just throw in the Chat GPT (Artificial Intelligence) collapse as well, link here.

With all of that as the backdrop, let’s see what silver is up to these days.

Silver, SLV ETF, Weekly

A terminating wedge with an MACD crossover.

We’re at the spot with price could go either way. There has been no wedge breakout to the upside, or down.

If we do get an upside breakout, the position of the MACD is set-up for a potential bearish divergence.

Covered many times on this site; the possibility that precious metals could move higher as a result of the miners imploding.

Adding to that idea are the components of tracking SILJ, silver miner EFT. How many of these outfits have an actual P/E?

PAAS does not, HL … no, CDE … no, NEXA … no, GORO … no, and on it goes.

Stay Tuned

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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®, trade mark: No. 6,505,279

Bond Market … Bombs

August 31, 2024 By in Bonds, Federal Reserve, Interest Rates, TLT, Wyckoff 1 Comment

Look Out Below

The last update on bonds, left us with this:

“At this juncture, it’s not unreasonable to say bonds (TLT) are at The Danger Point®”

It’s now five trading days later and five successive lower closes on TLT.

Wyckoff analysis provided the edge to surmise, the next probable direction for bonds was down.

Now that rates are back on the upswing, the interesting part (get your popcorn ready) is how, or what, the Fed is going to do at the next meeting … Tick, Tock. 🙂

Long Bond Proxy TLT, Daily

If bonds continue lower, it’s going to get more than a little interesting.

At the minimum, one would have advance warning, rates may not be lowered and/or, if they are, that move could be quickly reversed (not advice, not a recommendation).

Stay Tuned

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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®, trade mark: No. 6,505,279

August 25th, 1987

August 26, 2024 By in 1987, 2007 - 2008, Artificial Intelligence, Bonds, Dow 30, NVDA, SOXS, SOXS-24-13, SOXX, Uneducated Economist

All Time High (and reversal) For DJIA

Everybody seems to talk about the crash of ’87, as if it suddenly appeared out of nowhere, October 19, 1987.

Digging deeper, the crash started months earlier, at the market peak on August 25th.

One may consider today, Monday, August 26th, the 37th anniversary of that top; when by chance, we’re at another all-time high.

By now, most of us are tired of The Gong Show style prognostications:

‘Crash this’ and ‘crash that’, ‘the dollar’s going to collapse’ and there’s that! 🙂

At this point, none of those things have happened … yet.

In fact, the ‘collapse’ may actually be of a different sort this time around; posed by Uneducated Economist, link here (time stamp: 2:04).

Real & Separated

We may indeed get an ’87 or ’07, type of collapse, eventually.

Or, it may be that sectors wipe-out individually.

However, as UE points out (above, link), the ‘crash’ this time is hidden. It’s the separation of wealth from the ever more have-nots, to the haves, and have-more.

The (Biggest) Bubble

As the Dow Jones is making an historic high, possibly the biggest bubble of all time, the A.I. bubble, led by NVDA, and the SOX Index (SOXX, tracking ETF), peaked out on July 11th (not advice, not a recommendation)

When we last left the SOXX, with this update, link here, it had this to say (emphasis added):

“If we just saw a test of resistance (solid black line), then there’s only one (or a variation of one) right answer at the next session.”

“That is, SOXX, price action (by the close) to be either net sideways or down (not advice, not a recommendation).”

Well, ladies and gentlemen, that’s exactly what happened.

The SOXX, posted a new daily low, closing down -5.86-pts., or -2.51%.

Nvidia is scheduled to release earnings this Wednesday.

Let’s see what happens next.

Stay Tuned

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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®, trade mark: No. 6,505,279

The ‘Secret’ Lies With Bonds

August 25, 2024 By in Bonds, Federal Reserve, Interest Rates, Prechter, TLT, Wyckoff, ZeroHedge 1 Comment

What Happens, When It Doesn’t Happen?

‘The truth has no defense against the man determined to believe a lie.’

Unknown

It’s been proven many times on this site and by others more notable (i.e. Prechter), the Fed is not a leader.

They are followers; essentially reacting (not responding) to what the bond market is telling them.

Done Deal? … Not Yet

The financial press acts like a rate cut is a done deal.

However, when looking at the chart (i.e., the real leader), long bond proxy TLT, it makes perfect sense the Fed would propose a cut at the September 17 – 18, meeting.

It’s what happens between now and then, that’s important.

For clues as to what that ‘then’ could be, we go to the bond market itself.

Long Bond Proxy, TLT, Daily

“What do you see?”

There’s a lot going on in this chart; the mark-up (below) is divided into two.

First, is the targeted measured move (that’s been met) out of the wedge formation (not advice, not a recommendation).

Next, we’re also in a Wyckoff Up-Thrust condition which may have been tested on declining volume, this past week (not advice, not a recommendation).

At this juncture, it’s not unreasonable to say bonds (TLT) are at The Danger Point®

It would appear, the weight of a feather could move prices either way.

The interesting part will be what comes next; Sunday overnight Futures open, is about nine-hours away …

Stay Tuned

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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®, trade mark: No. 6,505,279

Bonds In Trouble … Rates Higher?

August 17, 2024 By in Bonds, David Weis, Federal Reserve, Interest Rates, TLT, Uneducated Economist, Wyckoff

The Water’s Fine, Come On In

The financial press and their lackeys, expects the Fed to pull a rabbit out of a hat and lower rates.

The public’s perception seems to be:

‘Happy days are here again’, if rates get lowered, I’ll spend and spend. I can’t help myself, there is no end. So, get rates lowered, again.

Wyckoff warned about the financial press over a century ago. Since then, not much has changed.

In fact, it’s probably worse.

The public thinks rates are coming down. It’s the ‘credible threat’ as Uneducated Economist puts it. The Fed ‘threatens’ to lower rates, and it ‘happens’, sort of.

Actually, rates aren’t lower, but the market has distorted itself, as if they were.

So, let’s get past the narratives and go straight to the truth, price action in the bond market.

Long Bonds, TLT, Weekly Close

As my mentor Daivd Weis used to say: “What do you see?”

I’ve already marked-up the chart and I see one Wyckoff Up-Thrust, reversal, after another (not advice, not a recommendation).

That, along with exhaustion spikes in Force Index, at or near significant reversals.

The ‘Scary’ Part

Wyckoff analysis is not only price action, it’s volume as well.

Look at the volume in TLT, over the past year.

Massive inflow and what has price done? It’s gone essentially nowhere.

Wyckoff called this ‘Effort vs. Reward’. Lots of effort with little (net) reward.

Add to that, a potential exhaustion spike in Force Index (far right side, purple circle).

Stay Tuned

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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®, trade mark: No. 6,505,279

Bonds, Oil & The Squeeze

August 13, 2024 By in Bonds, DRIP, DRIP-24-01, Oil, Oil & Gas, TLT, USO, Wyckoff, XOP, ZeroHedge

Bond Market Model?

According to this just out from our financial press, hedge fund managers have reduced holdings of Brent crude futures to ‘lowest levels on record’.

That condition supposes some kind of bullish bias and potential upside reversal.

Never mind the chart only goes back to 2011.

So, it’s really ‘the lowest in thirteen years’.

That’s hardly the hundred years or so, one would infer without digging deeper.

The Bond Model

Let’s not forget, bonds had a similar ‘maximum short‘ condition back in 2020.

Back then (like now), the ‘max-short’ was supposed to result in some kind of history making squeeze.

The result? It never happened.

Instead, bonds collapsed, rates launched higher and here we are today.

With that, let’s look at oil proxy, USO.

U.S. Oil Fund, USO, Daily

As of today’s action, it’s not looking too good for the bulls (not advice, not a recommendation).

It’s somewhat self-explanatory.

Price action is in Wyckoff ‘up-thrust’ position and with today’s reversal, appears to be confirming (not advice, not a recommendation).

As the earlier post stated, I’m already short the sector, DRIP-24-01, with a definitive stop defined as yesterday’s XOP high (not advice, not a recommendation).

If the ‘max short’ for oil really is the pre-cursor to an upward squeeze, we may be about to find out very soon.

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.

The Danger Point®, trade mark: No. 6,505,279

Breakaway Gap … Biotech

August 7, 2024 By in $SPSIBI, Biotech, Bonds, Interest Rates, LABD, LABD-24-16, SPBIO, TLT, XBI 2 Comments

‘Today Was The Day … ‘

If there was a day to attempt a close of the (August 2nd) gap in biotech (XBI), today was that day.

With the higher open, supposedly from an interest rate policy reversal in Japan, link here and here, there appeared to be plenty of upside momentum for higher prices.

It didn’t happen

Instead, XBI posted a new daily low, painting that gap as a downside breakaway (not advice, not a recommendation).

As noted in other updates, failed moves are the most telling, getting focused attention from ‘The Street’.

Biotech XBI, Daily

The breakaway is noted.

In addition, trendlines have been updated.

The market could somehow recover and close the gap.

However, with the poor bond auction, pointing to no rate cut or even a rate increase, probabilities suggest more downside for XBI (not advice, not a recommendation).

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.

The Danger Point®, trade mark: No. 6,505,279

Correction … or … Crash?

August 2, 2024 By in 1987, Artificial Intelligence, Biotech, Bonds, Corn, Federal Reserve, Gold & Silver, Natural Gas, TLT 1 Comment

1987, Deja Vu

Insane, delusional valuations, high interest rates, no rate cut.

What could go wrong?

Visitors to this site already knew that ‘something’s up’.

Fully documented well in advance of today, was the A.I. bubble reversal, silver reversal, biotech reversal, and commodities like corn and Nat-Gas continuing their sustained decline.

Now the market hysteria is resulting in the typical knee-jerk, ‘flight to safety’ to the bond market (not advice, not a recommendation).

Surely, with all of that, the Fed will cut rates, right?

For the (potential) answer to that question, let’s look at the bond market.

Long Bonds, TLT, Weekly

Already proposed on this site, the Fed does not lead the bond market and interest rates, it follows it (not advice, not a recommendation).

So, what’s this chart telling us?

If the market continues its decline in the coming weeks, TLT price action itself shows a potential for higher bond prices (lower yields).

We’re just over six-weeks away from the next Fed meeting.

Fed Follower?

If the Fed is still a follower, not a leader and if bond (TLT) prices reach the target just as the September meeting is held, then, one would expect a rate cut (not advice, not a recommendation).

Important to note, if TLT gets to the target area, it’s in Wyckoff Up-Thrust (potential reversal) position.

Economic Air-Pocket

If there is a rate cut as a result of the leading action of the bond market and then it reverses to the downside (rates higher), that’s when it would get real interesting.

Correction or crash; we may have to wait until September to find out (not advice, not a recommendation).

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.

The Danger Point®, trade mark: No. 6,505,279