Biotech Strategy … Going Forward

SPBIO, Correction Complete

This morning’s action in biotech SPBIO, indicates we’re done with the upward corrective move.

The prior short position LABD-22-02, was reduced throughout the downward push over the past week and then exited completely in this morning’s pre-market session.

Within minutes after the open, as LABD pushed lower (SPBIO higher), it became obvious, a significant reversal was at hand.

It took LABD, just a little over two minutes to clear out stops and then begin an upside reversal.

Amateur vs. Professional

Dr. Alexander Elder covers the amateur/professional difference in his book Come Into My Trading Room.

That is, if an amateur gets stopped out or exits with a loss, they never come back.

Even if the trade reverses to go their direction, they refuse to re-position … having been ‘spanked’ by the market.

Breaking free of the (engineering) perfectionist mindset, is just one challenge during the journey to professional.

It must be overcome to achieve sucess in the markets.

Re-Positioned, Short

All of the above to say, the short in biotech has been re-established: LABD-22-03 (not advice, not a recommendation).

The difference at this point is, there’s a high level of expectation on what’s likely to happen next.

As Wyckoff put it a century ago, the reversal and re-position, enables us to be ‘in tune’ with price action.

Biotech SPBIO, Weekly

We’re going to invert the chart and mark it up.

First off, we can see the rule of alternation at work.

Next, we have at least two potential trading channels.

This one …

And this one …

We’ll let price action itself define which one (or none) is in-effect.

When we get a corrective move that resolves itself, at times, it creates a pivot point with a different rate of advance or decline.

That means, there’s more than a good possibility, the second (more aggressive) channel, is now dominant.

Summary

As this trade progresses, we’ll cover potential areas where the existing position can be increased with as low risk as possible.

As this juncture, LABD is trading in the area of 55.25.

The early (pre-market) loss has been more than recovered and we’re now well in the green for the day.

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

‘Now, We See The Violence …

… Inherent In the System’

It may as well be a Monty Python skit.

The number of opinions forecasts, pontifications and gesticulations have reached levels beyond the absurd.

Everybody’s important and has some intellectual and/or philosophical missive to promulgate.

We have great levels of insight like the selected items below. As promised, these comments were taken from the article linked in the last post.

“I don’t need to pay some 78 year old to hold 1/2 my money in cash”

“What a joke. We’re heading for multi-year blow-off top”

“78 year old fund manager loses his azz … markets going nowhere but up”

“Parabolic increase to nosebleed levels and an epic explosion 3 years from now.”

Seems our idiot/lazy Boomers, Gen-X-rs, Millennials, Gen-Z-rs, and just about everybody else, is the genius in the room; except for the 78-year-old.

He’s just a buffoon.

If someone has no real skill, experience or initiative, they resort to trash-talk like we see above.

Getting the right experience is the hard part.

Having experience in the markets involves many years of education (i.e. losses).

Just for documentation’s sake, let’s take a look at two examples of what experience looks like; each in their own respective industries.

Exhibit A:

Go ahead, check out this Bubba from Amarillo, Texas.

His customers drive from neighboring states, hundreds, if not thousands of miles away to have him rebuild their transmissions.

Within the first 5-minutes of the video above, there’s probably 30-years of experience on display.

I would suspect his rebuilds go for top-dollar; rightly so.

Then, we have this:

Exhibit B:

Yesterday’s market action, and today’s, has happened before.

That is:

A sharp multi percentage point, headline grabbing spike higher (within a down market), that’s immediately reversed the very next day.

Not only that, but the reversal also signified a bear market had started in earnest.

S&P 500, SPY, Daily Chart

Let’s set the stage.

In our example, the S&P had already topped and reversed.

It spent the next seven months heading lower and then retracing upward to an eventual downside reversal.

The next leg down continued, but then a few days later, there’s a massive, headline grabbing, upward spike.

Is the bear market over?

Is this the signal to buy the dip like our ‘experts’ above think for the current situation?

The next day, price action reversed the entire gain (like it has done today).

The chart shows the result.

From a personal standpoint, a 78-year old that’s still mentally sharp enough to provide his services and is not an obvious (globalist) sell-out the likes of which are on CNBC, then I’m very keen on what he would have to say.

His message: It’s the biggest bear market of his life.

Secondly, as Dr. Elder has said, ‘Trading is an old man’s game’. A good memory is critical to creating an edge.

In our example, I remember that upward spike well.

It was a Thursday.

The next day, price action reversed hard to the downside.

It never looked back for nine months.

Summary:

Is the S&P scenario described above, where we are now?

History never repeats itself exactly.

However, one can propose with some level of confidence, if today was the kickoff to the next leg, it has potential to be the fastest, farthest down price action in market history (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

China, FXI, YINN & YANG

Reposition The Short

‘Once stopped out, the amateur never comes back.’

That’s the assessment from Dr. Alexander Elder, years ago.

The amateur thinks he has special analysis powers and has to be correct on the trade immediately.

On the other, hand, the professional may attempt up to three entries (or more) to get the position they want.

So, it is with Emerging Markets (EEM) and the correlated trade, China (FXI).

Yesterday’s jump higher in both the EEM, and FXI, did not invalidate the work already done, linked here.

Instead, that move told us where to look.

As shown below, the FXI had the least net upward movement. The percentage gains have reduced substantially

FXI, Daily Chart

Using that information, FXI appears at, or near the end of its short squeeze move.

The Emerging Markets trade (once stopped out) was re-positioned to be short the FIX via YANG (not advice, not a recommendation).

YANG, Daily Chart

Upon initial glance, it appears to be a lot of (short) positioning activity. That may be true for now.

However, the objective is to identify a sustainable move (before it’s obvious) and then continue to build on the trade.

Summary

Note how there’s a huge downward slash in YANG, that corresponds to the sharp short squeeze move in FXI.

From a risk standpoint, one way to look at this event, it’s not likely to happen exactly this way again (rule of alternation).

We’re about 20-minutes before the open.

YANG, is trading higher in the pre-market by + 0.25-pts, or about + 1.61%.

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

‘Four Generations’

The Average Life Of A Fiat Currency

What if the ‘imminent collapse’ of the dollar is overblown by about 50 – years?

According to this just out, on private gold-filled currency, the article states average life of a fiat currency, is four generations. It goes on to say there are exceptions like the British Pound, continuing on even after hundreds of years.

The Black Swan

In Taleb’s book ‘The Black Swan’, he says it’s an event that nobody expects. It has long lasting repercussions and permanent change.

However, what most if not nearly everybody ignores or leaves out, is his alternate definition. That is:

A Black Swan can also be a future event that’s widely accepted as fact, that does not happen !!!

Is that where we are with the U.S. Dollar?

Even though the dollar has not collapsed and in fact, has rallied as we’ll see below, the ‘collapse’ talk continues unabated.

It’s easy to talk about dollar collapse.

It’s what gets the clicks. No matter that an actual collapse may be years if not decades away.

As of this post, how many ‘monopoly money’ YouTube videos can be found? Seems like it’s the same number or more than, ‘gold to skyrocket higher’.

Well, so far, gold has not skyrocketed higher.

On top of that, this site’s even provided an exclusive correlation that gold’s moving inversely to corn.

See ‘Insight Note at the end of this post.

Ever since the ‘Derecho‘, it’s never been the same.

Back to the dollar.

No doubt, the dollar was whacked over the past trading week. Let’s take a look at what the UUP, price action is saying about itself.

Dollar, UUP, Weekly Chart

The unmarked chart shows the dollar oscillating, testing support for six-months at the beginning of 2021.

Then, in mid-June ’21, UUP pivoted decisively higher (gold, GLD, pushed lower) and never came back to those levels.

Of course, this past week The Usual Suspects were out talking about the dollar and ‘monopoly money’.

Since the ‘gold skyrocketing higher’ forecast failed spectacularly, along with it being the investor’s fault, we then had the ‘clueless‘ and now, it’s ‘monopoly money’.

The chart below shows last week’s bloodbath has served to bring UUP, down to an established trend-line.

It’s important to note, with all that (down) volume, the most since early 2020, UUP was not able (thus far) to break through the trend (blue line).

That leaves the dollar at or near, the danger point.

Continued, sustained selling, risks breaking the uptrend.

If the opposite takes place and UUP starts to rally, last week may have been an inflection point (to the upside).

Gold (GLD) and the dollar appear to still be inversely correlated.

Summary:

Ever since removal of the link to gold in 1971, the dollar has the potential to collapse at any moment.

However, in this case, we at least have some historical precedent that on average, fiat currencies tend to last four generations before becoming worthless.

Wyckoff sates in his writings over and again, ‘somebody always knows something’.

If there’s a collapse afoot, he tells us to look at what the market is saying about itself (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

Insight Note:

It’s been a strange coincidence over the past year or so, ideas presented on this site make their way to certain YouTube sites either in the titles, or within their content.

The timing of this phenomenon, that within a day or two, ‘post it first here, see it on YouTube there’, has occurred more times than one would consider as just ‘coincidence’.

Admittedly, the insights (making their way to certain YouTubers) have not been exclusive … that is, until now.

Recognition of the Gold/Corn inverse correlation, first posted here, is unique to this site.

As far as is known, this correlation has not been presented on any other financial site or YouTube channel or any other medium.

It may be an important data-point and map into this site’s long-time premise; it’s the corn and the grain first, then gold and silver (not advice, not a recommendation).

For more detail, search for Genesis 41.

When ideas from others are incorporated into the analysis presented on this site, full acknowledgement of the source is cited.

As Dr. Elder said in his book ‘Come Into My Trading Room’:

“I have zero respect for thieves”

He’s talking about the theft of his book title: “Trading For A Living”. He goes on to say, (paraphrasing)

‘Do you really want to use market analysis or input from someone that can’t think for themselves?’

Authorization:

Therefore, this footnote is authorizing the further use of the Gold/Corn inverse correlation by others in the industry if they so choose with the following caveat:

If one of the sites monitored (or some other media) uses this exclusive insight, and does so without referencing the source, it puts this author in the unenviable (but not unfamiliar) position of calling out the thief by name … not unlike what Stew Peters is doing (to the hoax/genocide perpetrators) on his broadcasts.

This market environment’s providing a fantastic public service:

It’s separating out the hucksters, the shysters and the otherwise incompetent from those who are, or who are striving to provide a service or useful insight.

The general investing public may find out soon enough, they’re on their own. Maybe unbeknownst to them, they’ve always been on their own.

End

Volatility Event: Newmont Mining

Alignment Of The Bears

“Volatility Is Good”

Volatility cauterizes the emotions. It reveals the market extremes and shows each player’s hand; bulls and bears.

With the market just opened we’re going to look at gold’s last man standing: Newmont Mining.

‘Last man standing’ because, except for two equities far down in Senior Miner’s GDX, no one is anywhere near their mid-November highs.

The take on this: The gold market’s thinning out and ready to reverse.

A really big move

It’s easy to get lost and hypnotized with the day-to-day action. However, by pulling back, one sees the potential for a massive short (the market) opportunity (not advice, not a recommendation).

Implosion Effects: Broker Platforms Go Inoperative

Over and again, nearly each time there’s a big down move in the markets, where the Dow may lose 1,000 points or more, brokerage platforms seize up.

It happens so often; it’s probably best to incorporate it into one’s trading approach.

That’s one of the reasons, if not the main reason to work the short side (not advice, not a recommendation).

Newmont’s Short Clues

The volatility has exposed everybody’s hand on both side of the trade. That’s the good part.

We’ll touch on each technical event separately, starting with the unmarked daily chart:

First off, markets that have wide, high-volume bars, tend to come back and test that bar. We see it below:

Next, price action’s got itself into a terminating wedge; a potential bearish reversal pattern:

Then, we have today as Fibonacci Day 34, from the December 2nd, reversal low.

As this post is being created, NEM just made a new daily high; potentially culminating its wedge terminating move.

Big Fish, Little Hook

As Dr. Elder has said concerning stop placement, ‘You can’t catch a big fish with a little hook’.

So, we have GLD, GDX and GDXJ, in a November bull trap (up-thrust), with what looks like two-months of price action to come back and test.

If that assessment’s correct and it took two months just for a test, whatever happens next, may be on the order of years to resolve itself.

From a trade standpoint, it looks like today’s low in JDST, current open position, JDST-22-01, may be a good place for a stop (not advice, not a recommendation).

Newmont, Reversing

After Newmont posted a new daily high, it’s currently trading below yesterday’s close.

Deflation Pivot-Point

We have the usual hysteria in the gold market but this time, deflationary forces may be overtaking the manic gold bulls.

Case in point:

Existing home sales look like they’re rolling over. All kinds of excuses being made about lack of inventory and the imaginary ‘Speck’ with its new variant.

The one thing not imaginary about The Speck, is this report about what’s really going on.

Massive ‘depopulation’, is deflationary.

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

The Chart Speaks …

Massive Trading Channel In GDX

The past week has been a frustrating one being short the gold market.

Is the current trade, DUST-21-01, in a correction or an outright reversal?

It’s in the green (not advice, not a recommendation) but seems like it’s taking forever to get moving.

Paraphrasing Dr. Elder; He says ‘when in doubt, pull out (or farther out).’

So, we’re going to do just that.

Senior Miners, GDX

The un-marked daily chart is below. The second one is the same but inverted (to approximate inverse fund DUST).

Inverted

From the blank charts, it’s not immediately obvious.

However, the chart below shows GDX in a massive trading channel.

On top of that, today (Friday) may have been contact and verification of the right-side channel line. We won’t know for sure, until next week.

There’re about nine-months of trading action which also includes the two months to create the up-thrust set-up.

Sitting Back

If you sit back and take it all in, one begins to realize the enormity of what’s going on.

The up-thrust set-up was formed in two months. The channel itself, the bigger picture is nearly a year of price action.

From the inverted chart, the spike (downward) December 15th to now, is when the market thinned-out.

That’s when based on the data, funds flowed out of the senior miners and (some of it) into the last man standing; Newmont (NEM).

The stage is set.

Summary

Trades can fail. Anything can happen. That’s a given in the markets.

However, it looks like GDX is at another critical juncture.

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

Talking Turkey

Lessons From Mr. Partridge

From Reminiscences of a Stock Operator, ‘Turkey’, aka Mr. Partridge, was much older than the rest.

The rumor in the broker’s office was that he was rich.

Even so, he was not contributing to heavy commissions (i.e. day and swing trading) as far as Livermore could tell.

The other thing was, that he never offered advice.

If a stock tip worked out, he would thank the tipster … if not, you never knew if he took a position or not.

Losing The Position & Psychological Impact

Turkey’s ‘losing the position’ remarks impacted Livermore the most. He recognized that Partridge wasn’t some old duffer; he was an astute speculator.

Losing the position: Not the same as holding a loser.

Maintaining a profitable position during a correction while at the same time, recognizing a big move could be in the works, requires (mental) strength; let the market itself say when to get in and out.

This link has Prechter’s ‘missing out’ story on big gains.

Continuing on with Turkey.

In the book, he said he ‘paid a high price for his tuition’ and does not want to incur a second fee.

Attempting to ‘play’ the market in and out then repeat, by definition, leaves one out of the big move.

It’s not the move itself; it’s the recognition that fiddling with the position and losing it, has resulted in a lost opportunity that will never come back.

The psychological damage is immense.

It’s worse than taking major loss. Watching a move take off without you when you had planned for months (or years) for the set-up, may have left no way to recover.

Which brings us to the market at hand.

Gold (GLD):

This site is not advice, and it does not make market ‘calls’.

Presented here, are posts documenting how Wyckoff analysis is being used to spot market set-ups.

Those set-ups have shown themselves over time to be potentially profitable (not advice, not a recommendation).

The weekly chart of gold (GLD) shows the up-thrust that was months in the making.

We’re going to invert the chart and so, the ‘up-thrust’ now becomes a ‘spring’.

Note:

Back in the day, when I wasted time posting on SeekingAlpha, I would get numerous complaints about ‘inverting the chart’.

They wanted it spoon-fed and did not have the mental plasticity to look at situations from the opposite perspective.

The ‘inverting the chart’ came from none other than Dr. Elder, himself … discussed in Trading For A Living or Come Into My Trading Room if memory serves.

The main interest on the ‘Alpha’ site seems to be pontificating about how sharp your pencil is; how close you can come to guess what earnings (or some other meaningless fundamental) will be at the next release.

I have not been back in years … they’re probably out there still arguing … only this time, the banter may be about which “masks” are most effective. 🙂

But I digress.

Months To ‘Spring’, Weeks To ‘Test’:

The inverted chart of GLD shows it took months for price action to penetrate support and create a spring condition.

Since then, we’ve had a move higher and now lower coming back near support.

Is this a test or a failure of the move?

It was a short week. However, it may still provide actionable data. For example, range of GLD, GDX and NEM, all narrowed. Volume contracted as well.

The inference is, thrust energy is weakening and thus weights the probabilities to a ‘test’ and not a ‘failure’.

Deflation Pivot:

Interestingly, we’re starting the see the consumer has finally reached the limit of their spending. Price are staring to edge lower as reported here and here by Economic Ninja.

Another data point, a bit esoteric, is ammunition. Pices are starting to taper off as well. Most notable is 22-LR.

A couple of months ago, 22-LR was about 0.10 per round (bullet). Looking at this site, we see the cheapest price has dropped to .080/round.

That does not look like much but it’s a 20% decline.

Summary:

Everyone has their own time frame and market approach.

Taking a cue from Turkey, referenced above, I would rather sit through a correction, incur the erosion of profit than exit and ‘click my heels’ as Prechter puts it; then watch the original position move for a huge gain without me aboard (not advice, not a recommendation).

We’re likely to find out very soon if this is a major pivot lower or if somehow, gold (GLD) bulls gain control and drive prices higher.

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

Gold Natives … Getting Restless

Latest Reversal … Exposes The ‘Experts’

When the tide goes out, that’s when you find out who’s been swimming naked.’

No fan, and no endorsement of Buffett but the quote is applicable.

If yesterday’s Newmont analysis holds, meaning, it’s the last stand before another leg-lower, gold bulls might start acting irrationally.

Is it even possible to be more irrational?

Remember their manic prediction of $3,000/oz, gold in months, not years?

Barring a major reversal, the tide’s going out.

From the comments section of this ZeroHedge article, some in the herd are figuring it out as well.

As one of them says … ‘another year to wait before the Great Pumpkin’ (i.e., gold moving higher).

As this post is created, comments continue to pour-in.

Gold bulls are frustrated, confused, pontificating, crypto loving/hating, central bank blaming, it’s all there.

Thus far, there’s not one comment on what price action is actually doing.

Public Service Announcement

This whole business with the financial media and its attendant hucksters (recent examples, here and here) is actually a fantastic public service.

For anyone who’s still able to think (an act of rebellion in itself), it’s clear, or should be, if you’re on TV, or the mainstream media, you’re a shill until proven otherwise.

The good part?

All of this media, podcast, carpetbagging and corruption, plays right into the hand of Wyckoff analysis.

Wyckoff focused on what is … not what should be.

Even back in the early 1930s, he was adamant about ignoring the financial press. ‘You’ll never be successful’, he said if you listen to the hype.

Mixed Messages

On cue to support that statement, is Dan, from i-Allegedly; he reports ‘we’re getting mixed messages‘ in the economy.

Proving the point.

The (Trade) Plan Forward

With the caveat, anything can happen; gold could rally in a couple hours when the futures open, the short via DUST (not advice, not a recommendation), is as follows:

  1. The Set-Up: Complete
  2. The ‘test’ or ‘gut-check’: Complete
  3. The first ‘correction’: On-going
  4. Continuation or Failure
    1. Trend identification
    2. Potential channel(s)
  5. Exit process
    1. Scale out
    2. Full exit
  6. Post trade evaluation

What’s In A Name ?

Even if the trade fails at the next session, it would still provide valuable information.

With that in mind, no matter what happens it’s likely to be referenced in the future; so, it needs a name (or number).

Taking a cue from prior engineering work (creating numbering schemes), the current trade will be identified now, and in future posts, as: DUST-21-01.

Seems straightforward.

The ‘First’ Correction

No. 3, above is titled ‘The first correction’.

This labeling is borrowed from a trade discussed by William Doane, in Dr. Elder’s book: Entries & Exits.

Price action permitting, we’ll discuss how this first correction may be a brief one as opposed to a drawn-out choppy affair.

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.

The Danger Point®, trade mark: No. 6,505,279

Gold … ‘Gut-Check’

To See If You Can Hang On

Gold’s upside test has failed.

Now, it gets interesting.

Over the past four trading days, the gold market got slow and boring.

On top of that, we had Thanksgiving; providing more opportunity to be asleep at the wheel.

As Dr. Elder has said, when the market gets slow, traders start ‘squinting’ at their screens and imagine set-ups that aren’t there.

They forget (in this case) we’re in the middle of a potentially significant, long-lasting downside reversal.

All of this provides the conditions we saw at today’s open. A swift upside ‘gut check’ as David Weis used to call it.

It terrifies the weak hands

They either close out shorts, go long, or both; confused as to the real direction of the market.

How do I know? I’ve done it myself

Such a move, is typically what happens just before a market gets underway in earnest.

Gold (GLD) and the Miners (GDX)

We’re looking at the daily GDX, inverse fund DUST.

The chart below zooms-in on the trend contact points.

There’s a caveat to more GLD and GDX downside.

While gold has made a new weekly low, the miners, GDX, have not.

That leaves the possibility for some kind of upside action; although at this point, it’s low probability.

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

Lowe’s … Re-Visited

Mid Session

Spring, To Up-Thrust, Completes

The daily chart of LOW (above), is how it looked one month ago. This report highlighted, certain market behaviors repeat.

Now, we have an apparent up-thrust completion.

There may be other equities in a similar (up-thrust) position as of this post … One such potential is Carmax (KMX).

Opinion:

Successful trading, is a game of attrition.

The LOW set-up, that looks to be complete (for a short position) has probably lost all market participant interest at this point.

The i-phone crowd, looking for the next fix, is not going to wait around and monitor for a month to see if price action follows a well tested set-up pattern.

After things get moving though … they’ll be back, as Dr. Elder states; ‘being both lazy, and late.’

Summary:

We’re not shorting LOW (not advice, not a recommendation) as there’re plenty of opportunities with leveraged inverse funds (again, not advice, not a recommendation).

The point of this update is to show, once again, the market, LOW in this case, has gone from ‘spring to up-thrust’; a repeating price action phenomena.

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.