Category Archives: David Weis

Stops … How & When

June 3, 2024 By in David Weis, Dr. Elder, SOXS, SOXS-24-07, SOXX 1 Comment

The SOXX Example

‘Set the stop and walk away’.

Those familiar with the David Weis trading video, know that phrase well.

The entry analysis is done, the trade entered and now, the management of that trade (not advice, not a recommendation).

The SOXX & The Stop

We’re only part way through today’s session; it’s already been a very busy day for the SOXX.

A gap-up open that was quickly retraced. Now, we’re trading lower, hovering around 231.50

Elder said years ago, ‘when the market is at a reversal point, there’s a lot of turbulence’.

We have that for sure in this case.

Moving on to the chart

Semiconductors SOXX, Daily

Stated in a prior update, a short position on the SOXX would have an initial stop of 243.63.

As a result of this morning’s action, it’s reasonable to move that stop lower (not advice, not a recommendation).

The reason to move lower so quickly, has been defined by the market itself.

We’ve already had a sharp opening gap-higher where the bulls (may) have given it all they have.

That level was quickly retraced, inferring the bears are (now) in control.

If that level is threatened, SOXX moving higher, then bulls have regained control, likely to move higher, still.

There’s nothing else but ‘set the stop and walk away’. 🙂

Of course, if one is using the leveraged inverse fund SOXS for a short position, the stop level chosen would correspond to the SOXX, above (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

SOXX … About To Pivot?

May 9, 2024 By in David Weis, SOXS, SOXX, Wyckoff 1 Comment

Downside Energy & Acceleration

It’s been three weeks since the SOXX, competed nearly an 18% plunge that started back on March 8th.

Price has action rebounded since then.

However, in the past several days, it has completed an upside test and now (as of 12:05 p.m., EST) is posting a potential reversal to the downside (not advice, not a recommendation).

The 3-Day chart shows us the prior move had the second largest downward thrust energy, ever, for the index.

Semiconductors SOXX, 3-Day

The last downthrust energy, the largest ever, kicked off a decline lasting from January of 2022, to October the same year.

Moving closer-in on the details we have the following:

Do we have a ‘mini’ Up-Thrust, in the expanded view?

Whether the SOXX, is about to reverse down or not, one thing looks clear, it’s at The Danger 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 Top … Part IV

May 3, 2024 By in David Weis, DUST, GDX, GDXJ, Gold & Silver, Gold Miners, JDST, SLV, Wyckoff, zsl

Below Resistance

When the upside comes to a halt, it’s the ‘evil manipulator’s’ fault.

At least, that’s the common lament from our friends and pundits, alike. 🙂

Just a reminder, the markets have always been manipulated.

Back in the day, Wyckoff understood this. He sought to find out through price action, the desired (market) outcome of those ‘manipulators’.

By using his technique and reading the tape, the most probable direction for silver (SLV) was either sideways congestion or downside reversal.

The last update, link here, had this to say:

“If we’re in an up-thrust about, to reverse lower or consolidate, this is the type of market behavior to expect (not advice, not a recommendation).”

From then, we see SLV has moved lower.

Silver SLV, Weekly

Can reversals themselves, be reversed?

Could SLV, somehow gain traction and move decidedly higher? As David Weis used to say, “Anything can happen”.

However, at this juncture, we have SLV closing lower the past two weeks. Volume was steady and elevated, indicating downside pressure.

Separately, the miners are struggling (especially the Juniors GDXJ) at resistance.

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, XBI … Implosion

April 19, 2024 By in $SPSIBI, Biotech, David Weis, Elliott Wave, LABD, SPBIO, XBI

And Then, There’s ‘Elliott Wave‘

We’re heading into the weekend. Who wants to be ‘long’ this market?

Bueller? Bueller?

In the case of biotech XBI, it may have started the ‘dynamic phase’, suggested two days ago, in this update.

Then, there’s Elliott Wave.

Back in the day, while being mentored by the late David Weis, he revealed his ‘love/hate’ relationship with the method.

His quote to me was “Intermittent reinforcement, is a hook”; meaning, it works just well enough (but not profitably enough) to keep you coming back to ‘get it right’ next time … which never comes.

For me, I’m not going to use the approach for trading decisions, but highlight in the case of XBI, we just might have an Elliott Wave structure (not advice not a recommendation).

Biotech XBI, Weekly

If this structure’s correct, a lot can happen on the way to the end of ‘Wave 3’.

Note the XBI, topped-out right at the 38.2%, retrace in March (labeled, as ‘Wave 2’), before reversing lower.

Big In, Big Out

The chart above is a massive structure; years of action to form the top, reversal, counter trend wave, then reversal again, which is where we are now.

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 Top?

April 4, 2024 By in David Weis, Ed Seykota, Gold & Silver, Silver Collapse, SLV, Wyckoff, zsl 4 Comments

Know Your Market

There’s been something wrong with the precious metal’s, gold and silver, for years.

Gold and silver used to move essentially in tandem, over the long term; not anymore.

This link shows there’s a huge divergence in the correlation between the two metals. Gold has launched higher, while silver has lagged.

Right around June of 2020, the correlation began to break down. What else was going on (or being ‘rolled out’) around June of 2020?

Recall, silver’s primarily an industrial metal; affected much more (than gold) by manufacturing demand.

Strategy First

Shown by the market itself, direct correlation between silver and gold no longer applies (or has somehow changed into a new construct), silver’s not confirming the ‘inflation’ shtick, possibly influenced more by industrial demand.

Thus, we have the following.

Silver SLV, Weekly

Just listening to what the market’s telling us, it says, when SLV, reaches a top and inflection point (to reverse lower), it tends to print heavy upside volume bar(s).

Looking at the chart, price action’s all over the place. Wide bars, volume spikes, the gamut.

Markets like this are unstable and usually can’t mount a sustained move in either direction.

Typically, if there’s going to be a breakout (or breakdown), price action tends to get tight, or get itself into a ‘coil’.

Even so, we need to account for the market itself.

Having traded silver futures contracts during the last run up and meltdown from 2011 – 2014, the silver market is thin and likes to ‘spike’.

That (spike) behavior is confirmed by Ed Seykota in Market Wizards and David Wies in his (formerly) daily market updates.

We may be at the beginning of a set-up for a Wyckoff up-thrust (above resistance) and then reversal.

A possible measured move for SLV (to be covered in another update), puts the tracking ETF, right around 25.60, about 2-pts. from where we are now (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

Fed Leader … or … Fed Follower

March 24, 2024 By in Bonds, CVNA, David Weis, Federal Reserve, Interest Rates, IYR, KMX, Prechter, Uneducated Economist, Wyckoff

Which Is It?

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.

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

Nat-Gas … Heading Lower?

March 20, 2024 By in BOIL, David Weis, Livermore, Natural Gas, UNG, Wyckoff 1 Comment

No Breakout, Yet

The upside breakout anticipated and discussed in the last update has not materialized.

Instead of UNG, moving higher to penetrate 16.08, it’s moving lower.

We’re already at multi-decade lows, in Wyckoff spring position.

So, let’s look at what’s going on, getting down to a more granular level, the hourly chart.

Nat-Gas, UNG, Hourly

Action on the hourly shows a breakdown from a wedge.

Standard ‘measured move’ shows potential for UNG to target 14.50 – 14.60, (not advice, not a recommendation).

We’re already at historic lows, so continued downside may just be splitting hairs.

Strategy First

From a strategic standpoint, already discussed, is our new-normal environment of ‘disruption‘.

Expecting uninterrupted access to our current infrastructure is not the reality.

If UNG, manages to post new lows, we’ll address the potential for a strategic, long position (not advice, not a recommendation).

My former mentor, the late David Weis had a penchant for looking at the very long term, even yearly charts.

This also maps into Jesse Livermore’s approach; identify what’s likely to happen in a ‘big way’.

Remember, we have the EIA Nat-Gas report coming up, typically released on Thursday.

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

Set-Ups That Repeat

September 5, 2023 By in David Weis, Positions, SOXS, SOXX, Spring-to-Up-Thrust, Wyckoff 1 Comment

Two Years Later

The on-going short position via SOXS has been maintained (with a new stop) and here’s why.

Just over two years ago was this post.

There are certain behaviors that markets tend to repeat; what’s called a Wyckoff ‘spring to up thrust’, is one of those.

Looking at the 30-minute chart of SOXX, that’s what we have today, … just barely.

What happened this session in the SOXX may be the last move upward before a sustained reversal.

Semiconductor SOXX, 30-minute

This morning, the SOXX penetrates prior 30-minute lows and sets-up a minor ‘spring’.

Price action then moves higher to just barely exceed the prior session highs for the ‘up-thrust’.

Then we have a retreat in the SOXX, effectively confirming that what just happened was a Wyckoff spring to up-thrust.

This is where sustainable reversals tend to occur.

Positioning

The previous Hard Stop of SOXS 8.97, is adjusted by two ticks to 8.95 (not advice, not a recommendation).

Obviously, the expectation is for a SOXX downside (SOXS higher) reversal from this 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

Kabuki ‘Debt Ceiling’, & Gold

May 24, 2023 By in David Weis, DUST, GDX, GDXJ, GLD, JDST, SLV, Wyckoff 2 Comments

How To Trade ‘Kabuki’

You would think with all the handwringing, mental machinations, ‘debt ceiling’, we’re all going bankrupt, YouTube gold grifters et al, gold (GLD) would be in a monstrous rally.

Instead, we have what appears to be exhaustion and non-confirmation.

Gold (GCM23), is the only monetary metal (gold, palladium, platinum, silver) anywhere near its all-time highs.

Old-timers would call it a huge non-confirmation. The other metals are not on board with the ‘inflation’ narrative.

Time and again, we’re back to actually reading price action and having it tell us what’s real, not the mainstream.

So, trading ‘kabuki’ seems to be straightforward; just read the chart. Here’s one explanation from an unlikely source on why that simple task is so difficult: absolute, total, unrelenting focus.

Gold (GLD), Daily

When we look at gold (as of 12:05 p.m. EST), from a technical standpoint, it’s in Wyckoff spring position; a set-up to move higher.

The difference in this set-up as opposed to the one on November 3rd, of 2022 (not shown), price action’s ‘hugging the lows’ as David Weis used to call it.

We’re not springing higher.

The miners on the other hand (GDX, GDXJ) have already made their decision, moving decisively lower during this session (not advice, not a recommendation).

Junior Miners GDXJ, Daily

The chart below has two locations identified.

The first is this post identifying GDXJ, as a potential short opportunity.

The second is this post identifying the ‘test, reverse’ of the up-thrust with high probability of more downside (not advice, not a recommendation).

We can see the result.

Even though gold (GLD) had declined modestly with silver (SLV) more-so, the mining sector appears to be responding dramatically to the downside.

This ‘elevated metals, miners collapsing’ potential has been discussed previously.

Now, it appears that strategy is coming into play (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

Market ‘Tests’ & ‘Instability’

May 2, 2023 By in David Weis, GDXJ, JDST, Spring-to-Up-Thrust, SPY, Usual Suspects 1 Comment

Taking The Helm

‘We have assumed control …’

For the mining sector we’re about to find out if it’s bulls or bears.

With today’s overall (S&P, Dow, QQQ, etc.) down market and the press screaming in hysterical panic at the start of the day, you’d think the market had collapsed 50% or more.

The last update (over the weekend) had this to say about the S&P (emphasis added):

“So, here we are: The market (SPY) has rallied over the past week, giving the illusion that all is well.

However, it too is now in up-thrust (reversal) position.“

So, the SPY declines by just over 1%, everyone loses their head and starts talking about CBDC.

Moving on to the ‘knee-jerk’ sector for the day, let’s look at the miners and specifically GDXJ.

Junior Miners GDXJ, Daily Close

Admittedly, the prior update was unsure whether or not this sector had its up-thrust reversal ‘test’.

Well, now we know.

The chart above has all the Usual Suspects.

We see the spring to up-thrust repeating pattern.

Then, a steady decline from the up-thrust and today’s short-sharp test or as the late David Weis used to call it, a ‘gut check’.

At this point the market’s unstable.

We’ll know soon if somehow we’re on to new highs or if this was the last gasp of a bull move withing an overall, years-long, bear market.

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