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.
Question: Who’s going to buy from Carvana, knowing they’re clearing over $7,000 profit on every sale?
The latest earnings release states they’re making Gross Proft per Unit, of $7,049, vs. a more reasonable $529, from just one year ago; that’s over 1,200% increase!
Months ago, after the last CVNA earnings release, the father/son team of CarEdge found the operating numbers to be very curious.
Carvana CVNA, Daily
Price action is at a new high, and hesitating (not advice, not a recommendation).
Volume for the day (thirty minutes before close) has increased.
MACD is posting a bearish divergence and price action appears to be holding right at resistance (blue line).
All of which indicates, we may be at The Danger Point®.
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.
Right along with the current narrative, ‘The Fed’s going to cut rates’, is another narrative, ‘The Fed’s in charge, a leader, and sets rates’.
Is either one, actually true?
Years ago, Robert Prechter Jr. pointed out very convincingly, the Fed’s a follower, not a leader.
His research showed, over many years, the Fed consistently follows the market.
Along with that, was his premise, ‘The market leads the news, not the other way around’.
Using that, we’ll look at what the Fed’s likely to do next; let’s use the long-term view, the 10-Year Treasury.
What’s it telling us?
Macrotrends Historical Chart: Ten Year Treasury
As posted in the prior update, the 40-yr bond bull market, i.e., lower rates, is over (not advice, not a recommendation).
We see the upside reversal in rates (downside for bonds) took over 10-years to set up.
Rates pushed below established support into a Wyckoff spring condition, then reversed higher, then into an outright breakout.
Currently, we’re hovering around in ‘no-man’s land’.
Could rates dip lower (bonds higher) and we get a token rate cut in response from the Fed?
Well, as David Weis used to say, ‘Anything can happen’.
Strategy First
However, from a strategic standpoint and for the long-term, higher rates are more probable.
The market has already responded with interest rate sensitive sectors and stocks (IYR, KMX, CVNA, etc.), having peaked long ago, in 2021.
A Dangerous Game
Depending on one’s perspective, what’s going on here with interest rates, is a dangerous game of ‘chicken’.
As Uneducated Economist puts it, the Fed’s a ‘credible threat’; all they have to do is ‘talk’ and propose (i.e., threaten) to move rates and the market responds without the Fed actually doing anything.
It’s working, for now.
The Emperor Has No Clothes
The problem is, as Prechter has already shown with research done years ago, ‘the emperor has no clothes’.
The Fed does not control rates at all; it’s a follower, only doing what the bond market’s telling it to do.
For some reading this, it’s old news.
For others, it’s a shock to find out, yet another institution is not what you thought it was.
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 last update on Carvana (CVNA), asked the question if price action would enter what’s likely stop-loss territory for the shorts.
Well, here we are.
Just before the October post, CVNA restructured debt, but it was not yet in the numbers.
The result now, (via TC2000), is an improved book value of $2.13/share, with debt to total capitalization of just 97% … Wow, I feel much better 🙂
But wait, there’s more.
CVNA just posted ‘interesting’ numbers on its latest earnings. For discussion on that wonderment, link here.
All of which brings us to the chart.
Carvana CVNA, Weekly
The original (blue) resistance line and potential retrace target (23.6%) from the October ’23, post is re-created in the updated chart.
For the original post, the expectation was, shorts would be covered as CVNA broke out into the target zone.
Well, we have the breakout, but according to BigCharts (www.bigcharts.com), only about 150,000 shares of the over 33 million (sold-short) have been covered; not exactly the short-covering pandemonium that was expected.
At the same time, let’s not forget, sales at the new car dealers have already collapsed, link here.
The used car market is not much different, link here.
It may be the ‘big-shorts’ are just going to wait it out.
It may not take long (to reverse) under current conditions (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.
Not in any particular order; not advice and not a recommendation.
No 1. There (still) is no Fed Pivot. Seriously, have rates really, actually been lowered? Everyone has a huge case of ‘normalcy bias’. i.e., what the Fed did last time will happen this time.
The 40-year bond bull market from the 80’s, ended in 2020. We’re in a different paradigm now.
No. 2 Natual Gas UNG, is reversing. We’ll see whether or not there’s going to be a supply disruption.
No. 3 The semiconductors SOXX, now have a monthly bearish MACD divergence; daily and the weekly indicators posting even to prior tops (as of Friday’s close).
No. 4 Components of biotech index XBI, are being shuffled around faster than deck chairs on the Titanic … or, the Olympic 🙂
Seems like a mad dash to add/remove, increase, reduce equities to prop things up. We’ll see how that turns out. Currently, XBI is right at resistance level, 86.50 – 87.0
Here’s just one example from an index, riddled with equities that have no P/E.
No. 5 Carvana is very close to posting new highs and potentially, running the stops.
No. 8 Gold, GLD, is currently not going higher (look at the divergences); silver (SLV) is in a major non-confirmation, down nearly – 55%, from all-time highs.
During the 1980s inflation, precious metals moved (upward) together.
Silver looks like it’s responding to the destruction/collapse of (economic) demand.
No. 9 American Tower (AMT), number two in the IYR index, posts a clear false breakout and reversal.
If rates really are going (materially) lower, interest rate sensitive real estate should continue going higher, right?
No. 10 Which brings us to the bond market, TLT.
Price action broke above established resistance, currently hovering above that level.
It’s at The Danger Point®
We can see the set-up, a price action pattern repeated time and again, between the lower and upper blue lines, called a ‘Spring-to-Up-Thrust.
While the media laughs at the bears, let’s just see how this all works out.
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.
Book Value of -$6.56/share; no P/E since at least 2018, if-ever (data, Worden Brothers).
Using that Book Value, if the company was liquidated (theoretically) at this juncture, with 189-million shares outstanding, over $1.24-Billion, would be left unpaid.
Naturally, shorts have moved in and moved in aggressively.
They have collectively sold over 31%, or 33-million (there’s that ’33’, again) of outstanding shares, short (courtesy of BigCharts).
With all the financial carnage, you’d think it’s a no-brainer to be short. However, looking at the chart, there could be trouble ahead for those shorts.
Carvana CVNA, Weekly
It’s likely that with each pull-back from resistance (blue line) the shorts increase and so do the stops.
We have to figure, with over 33-million shares short, that’s huge buying potential.
Barring a bankruptcy (also a possibility) and CVNA, going to zero, shorts have to cover at some point, to close positions.
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.
As a reminder, the economic (and population) collapse created by protection from ‘The Speck’, will last the lifetime of anyone reading this post (not advice, not a recommendation).
To support that statement and expand on the enormity of what’s happening, we have this link.
‘Over the next 10 years, ‘Speck’ lawsuits are projected to experience tremendous growth.’
With that, let’s move on.
Alcoa & ESG
Just looking at the website, it’s an ESG cornucopia.
When looking at the chart, it’s (almost) a no-brainer.
First, the very long-term view (Quarterly)
Alcoa AA, Quarterly
On the long-term, we have the repeating market characteristic; ‘Spring-to-Up-Thrust.
A ‘test’ of that up-thrust has been occurring over the most recent quarter.
On the weekly chart, we see price action penetrated support with volume increasing.
Alcoa AA, Weekly
Technically, it’s a Wyckoff ‘Spring’ set-up. Some form of upward action next week is to be expected.
However, with the increased volume to the downside, probabilities are low at this point we’ll see any significant upside (not advice, not a recommendation).
Long Way To The ‘Open’
As said in the prior update, events are accelerating. The latest from ZeroHedge proves that to be true.
UBS Seeks Government Backstop As It Rushes To Finalize Credit Suisse Takeover Deal As Soon As Tonight
Another Nail in the Coffin
Looks like the Swedes have put another nail in the coffin for ESG. How long is it going to take for their pension system to fully collapse and then result in social unrest a la Paris?
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.
Beginning next week, we’re about to find out if Intel (INTC) is on track to be a ‘penny stock’, by year-end.
Stocks trading below $5/share, are technically called ‘Penny Stocks‘, and mostly ignored by institutional money.
Dystopian Hell: The Stage Is Set
INTC, has already cut the dividend by 66% (note the symbolism) and is ‘conserving cash’.
A large part of their operation with 18,600 employees, is just outside Portland, Oregon.
Here’s a recent look at Portland, uploaded two months ago.
‘Gee honey. Let’s take the kids and move to Portland … Not.’
Incredible, that ‘Speck Protection’ is STILL being pushed (time stamp 2:11). How would you like to work at a location at this late date, where it’s normal to wear a mask?
All of this brings us to the chart. The price action itself defines the next likely course (Wyckoff).
Intel INTC, Weekly Close
Last week closed testing underside resistance and potential right-side trend line contact (second chart).
Compressing the chart and expanding the downside scale, gives us the following.
Just in case anyone’s skeptical about ‘channels’ not being a real potential, here’s the latest look at Carvana (CVNA).
Carvana CVNA, Weekly Close
It’s important to note, not only the channel but the location of “No P/E”, which was the release of this post.
Carvana never closed higher after December 11th, 2021.
Intel, What’s Next?
Will it be the same for Intel?
Of course, that’s not known. Price action itself is the final arbiter; at this juncture, it’s at The Danger Point®
This is where the risk is least (not advice, not a recommendation).
If price action moves significantly higher from here, let’s say 5%, then we’ve likely bottomed and are heading into a rebound.
If not, and Monday, opens and closes lower, it may be a confirmation of the right-side trend line and potential trading channel (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.
Back in October last year, the update on CarMax, said this:
“… 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.
If and when that happens, CarMax rival Carvana, may be long gone; its disruptive vending machines possibly being used as homeless shelters or insect farms.”
Even with the short-squeeze mania last week, rival Carvana, remains down a blistering – 96.2%, from its all-time highs; having reached an interim low of – 99.1%, in December.
Insect farms, dead-ahead. 🙂
The ‘Bounce’
So, does getting to a high of KMX 80.92, meet the forecast of “the 85-area” ?
It looks close enough, but the real story is the bearish trade set-up.
I’ve lost track of the number of Wyckoff ‘Spring to Up-Thrust’, set-ups that have been covered since this post, over sixteen months ago; we now have another.
CarMax KMX, Weekly
Unmarked chart.
Long time users should be able to spot the set-up immediately.
For those new to the site or if more clarification is needed, here it is:
Getting down to the daily, is where a trading plan is created.
KMX, Daily
Several scenarios.
Three potential scenarios are below.
Remember, we’re in possibly the largest bull-trap in market history.
Those in control of the markets need to bleed-off the VIX Call options values by having the market go up, sideways, or down slowly (at first).
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® 