What ? … There’s No ‘Pivot’ ?

There Never Was

Well, another financial media lie has come and gone.

As Jerrimiah Babe says, time stamp 6:05, at this link:

“The good times are over.”

The Dow Jones was down over 1,000 points on the day and finished (along with the S&P, NASDAQ) right at the session lows.

Typical action for the markets under such conditions, is a follow-through at the next trading session, Monday.

Recall, it’s been presented many times on this site (Holiday Turns), major reversals tend to occur just before, during, or just after, a holiday week.

The 2008, countertrend reversal took place on the Monday (5/19/08), leading into Memorial Day Weekend. The big one in 1929, was the Tuesday (9/3/29) following the Labor Day Weekend.

The current reversal (discussed below), if it holds, has come a couple weeks early in the ‘holiday’ window.

It’s possible because of the massive size of this monster, that a week or two does not make a difference.

Let’s look at the Dow 30 and its perfect Wyckoff Up-Thrust, Reversal, and Test.

Dow 30, DIA Daily Close

Daily Close with Fibonacci retrace levels identified.

A close-in look on the reversal area.

Looking at the zoom-chart above, we had a Wyckoff Up-Thrust that touched 61.8%, then declined sharply before coming back to test at 50%.

After the test was another sharp decline. One can make the case, the up-thrust has been tested.

Continued (overall) downside is the higher probability with a ‘no Fed pivot’ providing the tailwind.

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

Dominoes … Begin To Fall

Juggernaut Set In Motion


This just out from Activist Post, shows we’re in yet another ‘never before seen’ event.

One of the references in the article can be found at this link.

Many times on this site, the ‘reduction in size’ has been discussed.

Now, the official numbers are starting to show-up. The bottom line? Retail demand is going to evaporate.

As a side note, it’s interesting that YouTube now has videos on how to spot Myocarditis …. something we’ve (in the serfdom) have never heard of … until now.

While everyone seems to be focused on the overall markets, S&P, Dow, and QQQ, underneath the radar, gold and the miners continue to rachet themselves lower.

Senior Miners, GDX & Inverse DUST

The 2-Hour chart of inverse fund DUST shows we’re still at the danger point discussed yesterday.

The zoom chart (below) has an interesting distinction.

The distance between the blue-line trading range and the magenta-line trading range, is the same. The black-dashed arrow is equal length.

This implies that yesterday’s move, along with today’s may be an ‘a-b-c’ correction. A counter-trend move.

If so, the main direction has changed from down to up (for DUST).

Summary:

Still at the danger point, we remain short this sector (not advice, not a recommendation).

The good part, if price action reverses in DUST and begins to pressure the most recent lows, it’s an indication something else is afoot and the trade is failing.

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

S&P, Retrace … And Then?

S&P 500 (SPY) At 61.8%, Retrace

Actually, all three of the major indices, the S&P, The Dow, the NASDAQ have each retraced to (at or near) a Fibonacci 61.8%, level.

The daily SPY is shown above.

Taking away the Fibonacci retrace levels, then adding notations gives us the following:

It appears we could be at the right side of a Head & Shoulders top.

Price action rolling over from here, then bouncing around the neckline (before breakdown) would let us know, we’re in a significant reversal (not advice, not a recommendation)

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.

Market Summary

Dow, S&P, Russell … all outside down

Three markets with key reversals and the biotech sector (SPBIO) posting an inside day.

One other (less followed) market of note with outside down, was basic materials (DJUSBM).

Gold’s (GLD) upward thrust from Thursday the 29th, continues to erode.

One gets the sense that it’s slipping away for the bulls.

SPBIO price action shows the most probable direction is lower.

Expectation for the next session, is for some kind of downside follow-through along with lower market action overall.

Positions:

Current positioning remains unchanged (not advice, not a recommendation) being short the biotech sector via LABD.

Market updates for the week will be limited (as the result of travel) and will resume with technical discussions by the week-end.

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.

Psychologically Unprepared

11:43 a.m., EST

When the break comes … it’s not coming back

Nearly 100-years ago, Wyckoff, stated:

‘If you can’t completely ignore the news and the financial press, you will never be successful in the markets’ (emphasis added).

In line with that, we have this: The very first sentence from this article out of barchart is questionable to say the least.

First:

There is no rapid ‘re-opening’. There never was. There is no ‘pent up’ demand.

Massive credit card usage shows the U.S. consumer has been decimated; using credit just to survive.

It should be (but somehow for some, it’s not) obvious we’re in a controlled demolition of the economy (including the food supply) on a world-wide scale.

Second:

Price increases are the result of supply chain (also, controlled demolition) shutdown not inflation.

Uneducated Economist has probably done the best job of ‘boots on the ground’ work to completely dispel the inflation false narrative.

He called the current and now waning lumber price spike two years ago. That’s how you know who to trust or believe. Take a look at their past analysis and see how it ‘aged’.

Third:

The U.S. population collectively, has never experienced real hardship. Those who made it through the Great Depression have all but died off.

There is no one around to give said population a swift kick in the pants and tell them to ‘suck it up’.

Northman Trader

Sven Henrich has come out with an excellent market update, linked here.

Towards the end of his analysis he states; ‘when the break comes, it will be quick, deep, keep going and most (if not nearly all) will be psychologically unprepared.’

Which brings us to biotech.

LABD Analysis:

Biotech SPBIO, is back as downside leader: Down just over -25%, from its highs in February, this year.

The daily chart of (inverse fund) LABD is below. The market itself is showing us it wants to follow the repeating pattern of trendlines (not advice, not a recommendation).

If the entire structure (from the February low) is actually a trading channel, it’s hard not to overuse the word ‘massive’.

Non Confirmation:

As of this post, the Dow, the S&P and the Composite are unchanged to slightly higher. Yet biotech SPBIO, is down -1.2%.

We won’t know until it’s all over … but it looks like biotech could somehow be the catalyst (along with the dollar and gold?) that precipitates the final reversal in the overall 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.

SOXX: Textbook Top?

11:48 a.m., EST

By The Book?

SOXX chart: Like something from a book on trading

Price action’s struggling at new highs. MACD’s posting a bearish divergence. Can it get any better for the shorts?

(not advice, not a recommendation)

At least one thing missing (as of this post) is a new daily low. If we get that, it helps provide confirmation of a SOXX, top.

The S&P (SPY ) and the Dow (DIA), have both posted new daily lows as has the Russell 2000 (IWM).

We can also throw in Basic Materials DJUSBM (IYM), making a new daily low.

Recall in a previous update, empirical observation over the years; market tops tend to occur before, during, or just after a holiday week.

Looks like we may be there.

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.

Dow Theory Sell: Update

12:51 p.m., EST

Upward Retrace To 38%

Downtrend To Resume?

It’s natural market behavior to rebound after a breakdown low.

Stops are hit; Amateurs sell and sell short. Professionals cover their shorts; go long or look to short again.

It’s what happens next, that’s important.

The market, DIA will likely come back to test the support/resistance boundary (blue line) in the daily chart above.

At this juncture, even though Dow Theory Sell was triggered (not advice, not a recommendation) with DIA closing below support last Friday, from a Wyckoff standpoint, DIA is in spring position.

Spring position; the market’s poised (but not guaranteed) to move higher.

If DIA comes back to test the boundary (typical behavior), there are two outcomes:

No. 1:

The test holds; price reverses and we’re on to potential new highs

No. 2:

The test fails; price re-penetrates the lows and then heads (much) lower.

Adding weight to the second scenario, DIA has already posted a new monthly low. That’s not happened since October last year.

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.

Update: Dow Theory, ‘Sell’

9:05 a.m., EST

Dow 30 (DIA) breaks trendline

Price action declining towards support

Price action rolls over and in the process, breaks the uptrend.

The prior update, had this link to an explanation of the sell signal (not advice, not a recommendation).

The sell signal is confirmed if/when the support at the dashed line is penetrated with a close below that line.

Summary:

The markets were volatile yesterday with sharp moves in the dollar, gold and the gold miners.

Pre-market action has gold (GLD), continuing sharply lower; – 4.1 points, or – 2.37%.

Inverse GDX, gold miners DUST, is trading higher as well; up about + 1.1 points, or + 6.65%.

For those monitoring this site on a regular basis, none of the above is a surprise.

We’ve been reporting on the pending dollar reversal for weeks; how gold (and silver) still appear to be inversely correlated.

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.

Print High & Close

The table lists well known index ETF’s; along with most recent highs and current (Friday) close:

All the usual suspects are there:

S&P 500, SPY, The Dow 30, DIA, Nasdaq, QQQ, and on.

What’s also listed is how far each index (ETF) is from its most recent all time high or ‘recovery’ high (in percentage terms).

Obviously, one of these is completely out of bed: Biotech, IBB

We’ll be discussing the technical condition of biotech tomorrow. For now, the updated ‘project’ chart’s included below:

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.