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.
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).
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.
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’.
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.
Was that the day where irrefutable evidence like this is going to stick?
Price action of Biotech Sector IBB, has posted a long awaited and anticipated reversal signal (not advice, not a recommendation).
We’ll look at that below.
The IBB, Up-Thrust & Reversal
As a reminder, in Wyckoff terms, an ‘up-thrust’ is where price action struggles above known resistance for some period of time and then reverses to the downside.
In the case of IBB, that ‘struggle’ lasted an incredible seven-weeks.
Biotech IBB, Weekly
Price action attempted to break above resistance for nearly two-months, before reversing lower.
Then we had an initial test during the week of 12/23/22 (on the daily for three days), and a secondary test last week.
Biotech IBB, Daily
The daily shows more detail on the struggle.
Point No. 1, was the initial test. Point No. 2, was the secondary test which appears to have decisively failed.
Pre-market action shows IBB, set to open slightly lower.
If it does, then expectation is for some (brief) attempt to rally as a test of the breakdown.
The Driving Force
For years, this site has not wavered in the assessment, what’s happening in this sector, will be the driving force for the entire market on a go-forward basis (not advice, not a recommendation).
Anything can happen.
It’s unknown if yesterday was ‘the day’.
What is known however, evidence is building on a massive scale. Every day, sometimes multiple times a day, we see the effects.
Positioning
This site presents the data, the insight and price action nuances. It does not give recommendations.
With that said, going short this sector is not as straightforward as the other major indices.
IBB, may be shorted directly but will likely result in a maintenance fee from the broker.
Of course, that puts one on the hook for the sector’s dividend payment (currently yielding 0.31%).
The other option is 2X leveraged inverse fund BIS.
However, this fund’s volume is thin … meaning it’s not nearly as liquid as the other inverse funds such as SDS, DXD, QID, SOXS and so on.
It’s up to the trader/speculator to participate or not.
We’re about fifteen-minutes before the open. Let’s see what happens next.
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.
This morning’s action in biotech SPBIO, forced exit of LABD-22-12, with a minimal loss of -0.12% (not advice, not a recommendation)
There was a bounce off SPBIO, resistance in the early session and then, it became clear the market was setting up to penetrate that resistance.
As the Fed announcement progressed, SPBIO, indeed moved up sharply.
Reversal Set-Up
By definition, such action puts SPBIO, in a test of a prior Up-Thrust (reversal) from 11/11/22 – 11/15/22.
Conversely, it puts the leveraged inverse fund LABD, in a test of a Spring set-up during the same period.
You can already see where this is going.
The work has been done on a fundamental basis as well as technical; biotech is set for significant downside.
Whether or not, we’re at that inflection point right now, is unknown.
Biotech 3X Leveraged Inverse LABD, Daily
Looking at the mark-up below, we’ve had a spring set-up; then, sign of demand with action moving higher and finally today, a test of that spring set-up.
David Weis used to call such drastic moves a ‘gut-check’, to see if you can hang on (not advice, not a recommendation).
Price action has come right back to support with a wide bar and high volume.
Such bars increase the probability of a counter move to test which in this case, is a move higher.
Summary
Remember, all this action’s occurring ‘within’, the SPBIO, bear flag that’s formed over two-plus months.
It seems like a huge understatement to say this market and the main indices, are in a dangerous position.
Positioning
Not advice, not a recommendation.
Like a Terrier on a Mailman’s leg, we’re not giving up on biotech’s potential downside … at least not yet.
Short position in SPBIO via LABD; details are as follows:
LABD-22-13***:
Entry @ 18.72***: Stop @ TBD***
Note: Positions may be increased, decreased, entered, or exited at any time.
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 looks bad for being short biotech and maybe it is.
However, as we’ll see below, the leveraged inverse fund LABD, could be completing its reversal set-up.
While today’s thrust higher in the overall markets was not unexpected (shown here and here), one should take note of the violence.
As of this post, from yesterday’s low to today’s high, the Dow has moved over 1,000-pts.
It’s what happens next that’s important.
Weak shorts are probably terrified, have covered, now wondering what went wrong.
So, let’s take a look at the short position on biotech SPBIO, and see if it really is ‘wrong’ (not advice, not a recommendation).
SPBIO, Leveraged Inverse Fund LABD, Daily
What we can see (above) is that LABD, is following the Wyckoff Schematic near exact for a spring set-up.
It’s just that today’s move is especially sharp and so one would think the set-up has failed … not so fast.
Another reason to think we’re completing a test of the spring, is below. Today is Fibonacci Day 34, from the high (low on SPBIO), set on September 26th.
We also have a potential trading channel as well.
As this post is being created, LABD is hovering at its lows; currently (as of 1:30 p.m., EST) trading at 19.89
Summary
Yesterday was an important day but it was not obvious, and not (yet) directly related to the markets.
A report was released on ZeroHedge (link here) which essentially confirms what some of us in the proletariat have known for years … if not decades.
It’s now out in the mainstream.
How long before the ‘elephant’ makes its way there also?
If indeed we’re at a reversal test of biotech and if that test passes (SPBIO downside continues), the move has the potential to be historic.
Positions, Market Stance (courtesy only, not advice).
LABD-22-09:
Price action blew through the stop located at 20.21 and is now hovering at those levels. The LABD position is being maintained but will likely be reduced in size as we head into the close (not advice, not a recommendation).
Special Note:
This sector and leveraged inverse LABD are highly volatile. Character of the market can change at any time.
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.
Most of the major indices finished higher today except for the miners, real estate and biotech.
The early session update said IYR, price action may be in a test of its up-thrust (reversal) from October 18th.
If that’s a valid assessment and it was a test, the volume is important.
Whether it’s an up-thrust or a spring, when the set-up gets tested, the volume gives additional clues.
What we’re looking for is when price action comes back to test, volume contracts.
If that happens, it means (with good probability) there’s no commitment to sustain prices at the test level.
Real Estate IYR, Daily
The real estate situation may be about to get interesting.
Volume contraction is near-textbook.
This is one of the rare times, there’s a high probability expectation; that is, IYR price action resumes its downtrend (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.
The Danger Point® 