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.
A nuance in price action can have (significant) meaning or be obliterated at the next session.
It’s no secret the dollar, gold, and the miners, are all at extremes.
The dollar is down, gold is stretched in a potential blow-off, and miners (GDXJ), just posted action that may be important (not advice, not a recommendation).
Junior Miners GDXJ, Daily
The last two days have printed a low of 60.13, but this is not the low of Wednesday, the 23rd. That low is 60.05, below the last two day’s lows.
Why is that important?
The last two days have not made new daily lows, so have not created a potential price action reversal (pushing below 60.05, and reversing).
We can also see, today’s bounce is to 23.6%, while last Thursday’s bounce was to 38.2%.
This all may mean something or not.
With the extremes noted at the outset, it may not take long to find out if the distinctions are important (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.
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.
With the reversal now obvious (since the Fed announcement, September 18th), we have the usual suspects putting out ‘content’ (here and here) letting you know what’s already happened.
In Prechter’s book, The Wave Principle of Human Social Behavior, he states, being part of the herd, is hard-wired into the brain.
Therefore, it takes diligent, consistent effort, to go against the mindless (limbic brain) herd if you’re going to make an objective observation.
So, let’s do just that, taking an objective look at the potential effects of the bond reversal.
Bonds (TLT proxy) began its reversal, rates higher, the day before the last Fed announcement.
The IYR, reached its high that Wednesday, 9/18/24.
Real Estate IYR, Weekly
It’s been nearly three years since the all-time high in December, of 2021. The wedge shown below has been just over a year in the making.
The reversal action of the past few weeks can be seen in the ‘Throw-Over’ area of the chart.
If the wedge has been identified correctly, price action has now entered back into that formation.
Positioning
This post highlighted a short position was on the horizon.
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.
We’re about to find out if silver (SLV), is headed for a breakout, sideways congestion and/or, outright reversal.
In a world that seems to be allergic to the truth (as serpentza, put it), we’re going to do just that; look at the truth, the price action itself.
The last update, link here, said to watch for an SLV, breakout that could fail, confirming a bearish divergence.
From the intro line, here we are.
We have the breakout.
All that’s missing is continuation higher or reversal (not advice, not a recommendation).
So, let’s go to the truth of the matter, the SLV chart.
Silver SLV, ETF, Daily
Years ago, Dr. Elder stated, when MACD histogram and MACD lines are parallel (bearish divergence), it’s a rare occurrence.
The coming week might be the deciding factor.
Before we leave this post, let’s throw in a bonus and consider the dollar ‘collapse’ narrative.
Dollar ‘Collapse’, Where?
Below is an updated chart of the dollar index.
Note the arrow to this link, posted nearly four years ago!
Dollar Index UUP, Weekly
It’s important to note, at the time the ‘Reversal Ready’ post was created, there was absolutely no-one (that was known) indicating the dollar index was headed significantly higher.
This is what’s meant by ‘Strategy’ in the About section.
Livermore was focused on what’s going (or likely) to happen in a big way.
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.
Developing a trading plan that accounts for broker outages, blow-ups, and platform lockups, was presented on this site, as early as December of 2020.
Back then, we had this:
“Built into that [system] approach is recognition there will be market outages, trading halts, communication interruptions and natural disasters.“
“The one thing that may separate this site from others, these (potential) events are taken into account.“
Fast forward to now.
Those events are not ‘potential’ anymore, but a reality.
Note: Before leaving that post, from December 2020, let’s not forget, the dollar reversal (and rally) discussed, is still going, nearly four years later!
That’s what’s meant by ‘a strategic, engineering perspective’ (see About).
Moving on to the topic at hand.
The last update showed potential trendlines in biotech, XBI.
As a result of today’s action, we’re revisiting the post with new information.
Biotech XBI, Weekly
As Dr. Elder said years ago, ‘trendlines are not made of glass’. Trendlines are more like a wire fence; the market can attempt a breakout that may ultimately get negated.
With the weekly XBI, that may be the case.
We’re about one hour before the close, only one day into the trading week; it’s pre-mature to say XBI, will finish the week (or even the day) inside the trendline shown above.
However, if we do end the week lower, it may be a serious bellwether; XBI could be in deep kimchi (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.
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.
In our example above, the commentor said their family survived in part, because they had “100kg of salt”.
That amount equates to about 220 lbs.
Converting 1oz gold for (roughly) 18-oz. salt, at today’s gold prices, is about $392,000 ‘worth’ of salt.
When they came out other side, the salt may have been gone, but they had the gold. 🙂
Now, moving on to the chart.
Gold (GLD), Weekly
Gold is at a critical juncture.
We’re either in a potential ‘throw-over’ on the wedge formation (with reversal) or about to pressure higher into all-time highs (not advice, not a recommendation).
We see a rising (terminating) wedge, along with a decline in volume (thrust).
We’re at The Danger Point®
Gold’s price action does not need much of a push to go either way.
Then, The Dollar
Recall, from the dollar update (link here), there’s a possibility for it to decline from current levels; potentially setting up a Wyckoff spring condition.
A dollar decline would naturally provide a likely correlation for gold rising into new all-time highs.
If either one happens, there’s probably going to be panic.
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.
Before we even get started, let’s take a look at the last time there was this much dollar ‘collapse’ hysteria.
The update at this link, shows the analysis of what was likely for the dollar during the previous round of hysterics.
That was over two-years ago and in itself, highlights the ‘strategic’ nature of the analysis presented on this site.
The UUP (dollar index) chart is re-printed below and shows the location of the ‘reversal’ update.
Dollar UUP, Weekly
That was then; so, let’s move on to what could happen at this point in time.
The chart below shows three potential scenarios based on current price action and location.
No. 1
The dollar rallies from here; moving on to test the highs.
No. 2
The dollar continues lower, tests or penetrates the prior lows, then rallies in a Wyckoff spring to the highs and potentially higher.
No. 3
We really do get a collapse.
The dollar breaks the support area, comes back to test the underside and then heads lower.
Hysteria In … Hysteria Out
Of the above three scenarios, which one is going to create the most media hysteria?
A better way to ask the question, which scenario would be the most profitable for those entities that ‘control’ (manipulate) this market?
If the dollar is still in an uptrend and this is just a pull-back, then Scenario No. 2, would likely be the most profitable.
Played Like A Fiddle
Remember, the general public is being played like a fiddle.
The recent and on-going mass exodus from the small banks to the larger ones right into the potential CBDC trap, is a good case in point (not advice, not a recommendation).
So, it could be as well for the dollar in Scenario No. 2
If the dollar heads lower and manages to penetrate support, there’s likely to be media pandemonium.
That would go right along with YouTube grifters losing their minds … all the while, getting those important ‘clicks’.
If it happens, that would be a fantastic, potential set-up for a short-covering rally.
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.
During 2022, we’ve had one short squeeze after another.
For 2023, it could be forced liquidation in the relentless squeeze for cash.
One corporate example of the squeeze is the announcement from CarMax; they’ve suspended their stock buybacks.
This ‘buy-back halt’, theme, needs to be added to the market strategy for the coming year.
We can put that on the list right along with skipped dividends, power outages, market outages, internet cyber-attack and supply chain disruptions.
A comment below, posted in yesterday’s update from Jerrimiah Babe, opines the typical consumer’s going to carry on unabated, until the very last minute.
“I don’t believe most people will stop spending until all access to credit is exhausted. Whether it be cards, after-pay, family, theft most will continue to keep up appearances. I honestly think most could be 2 months behind on their mortgage or rent and still be spending on crap. There’s no financial responsibility or discipline anymore.”
How that may translate to the mainstream is, they continue to report ‘the consumer is strong’ until instantly, overnight, they’re not.
Possible timing for that event may be late January, or mid-February (not advice, not a recommendation).
With all that in mind, the last post identified Netflix and Target, as potential candidates for significant downside opportunity.
‘Significant’, meaning a 50% to 90% decline from current levels (not advice, not a recommendation).
Target TGT, Yearly
The year is just about over so let’s start with a very long-term view.
Two things have happened over the past three-years.
Price action has met a measured move out of the wedge as shown; then, a massive downward thrust.
It’s important to note, this year’s down-thrust, dwarfs the previous one during the -64.7%, decline of ’07 – ’09.
There’s a band of support that’s at least nine-years wide, in the vicinity of 50 – 75.
We’ll discuss that in another update.
Netflix NFLX, Yearly
Technically, Netflix is worse than target. That is, it has the potential to decline farther and faster.
NFLX, has support as well but comparatively minor in the area of 50.
It does not become significant until the wedge (blue lines) in the vicinity of 5 – 10.
With Netflix’s ‘product’ being completely discretionary, it’s ultimate downside potential, from a fundamental standpoint, surpasses that of Target.
Summary
Time permitting, shorter timeframes will be presented.
However, since the primary focus of this site, is first on ‘strategy’ (think dollar rally), we’re interested in the larger timeframes.
That in turn, provides background to drill down further for any trade decisions (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® 