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.
While the media’s wasting no time setting up the average investor, for a ‘guaranteed skinning’ (as Dr. Elder used to say), providing an environment of constant, incessant, AI ‘get-in-now’, buy recommendations.
With that said, an ominous market sign has appeared.
As the daily chart of SOXX shows, we either have a breakout or a hole that’s about to be filled (reversed).
Semiconductor Index SOXX, Daily
In technical terms, the SOXX is in Wyckoff ‘Up-Thrust’, reversal position (not advice, not a recommendation).
A tick lower in MACD, confirms the bearish divergence.
Then, there’s Fibonacci
Enter, The Count
When markets are in a mania, reaching insane extremes, it allows for a (more) clean print of either Fibonacci retrace levels or time correlation.
Decide for yourself if that’s the case now.
Remember, tomorrow (Wednesday) is the 19th, and one day before Taiwan (TSM) releases earnings.
That release is scheduled for the 20th before the open.
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 ‘Artificial Intelligence’ (AI) clown show’s in full swing with a ‘predicted‘ single quarter target of $11-Billion, from NVDA.
That’s not to be confused with the budget clown show just ended in Washinton D.C.
And where does that leave Tesla? They seem to be left out of the latest round of cult-like insanity.
Back in the day, Dr. Alexander Elder stated, professionals don’t look for the ‘challenge’ in the markets (trying to figure out the NVDA, top), they look for the ‘money’ … there’s a huge difference.
Junior Miners GDXJ, Weekly Candle
As of 12:35 p.m., EST, from a technical perspective, even though we’re up for the day (so far), MACD momentum’s increasing to the downside (magenta arrow).
Nobody seems to be paying attention to gold and silver; all eyes are focused on the next shiny object.
Pulling out a bit farther on the weekly, there’s no question we’re in a channel.
The question is, are we (GDXJ) going to say in that channel or reverse from here?
The last update said we’d likely be testing the wedge break and that’s what’s happening.
A ‘test’ will take however long is needed. It’s either pass or fail. Pass in this case is resumption to the downside.
Technical conditions (MACD, wedge break) favor the downside (not advice, not a recommendation).
In addition, we need to keep in mind there’s a new circus in town; the miners may be well on their way to more downside before anyone steps out of the big-top to notice.
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 that understood, we’ll present three potential scenarios for Moderna (MRNA) price action for the upcoming days, or week(s).
When we last left our chief cook and spike-protein injector, price action was in a downtrend but also in Wyckoff spring position; indicating at least a chance for upside.
As with the CarMax (KMX) analysis, still playing out with Scenario No. 2, and/or No. 3, at this link as the forecasted price action, we’ll show potential Scenario No. 1 – No. 3, for MRNA, below.
Moderna MRNA, Daily, Forecasted Action
Scenario No. 1
Upside wedge breakout
Scenario No. 2
Downside wedge breakout with no test
And now, the most probable, ‘If there’s a downside breakout.
From a short-dated options standpoint, Scenario No. 3, is the most desirable (not advice, not a recommendation).
If there’s a downside breakout with no test, there’s always the possibility at some point, there will be a test, which in turn completely wipes out any potential gain in the (put) trade; time would run out and the option expires.
Re-Visiting, Elder
Recall, in the example that Dr. Elder gave, he bought OEX Put Options at 3/8-ths, back in the day when the markets traded in fractions.
Three-eighths is 0.375, which gives a target value on which option to select (not advice, not a recommendation).
To get to that small of a fraction, the option’s either way out of the money, short on time, or both.
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 a potential right-side trend (and channel) contact confirmed; shown below at – 86% annualized, odds are now favorable for a Put strategy.
In addition to the technical factors discussed, listed at the bottom of this post are no fewer than 22-links to the current fundamental state of biotech and their ‘handiwork’.
The weekly chart of MRNA, has a Wyckoff Up-Thrust and a test, confirmed by the downside pivot.
Moderna MRNA, Weekly
Notice the reversal action took place at a very weak Fibonacci 23.6% retrace.
The two blue lines on the daily chart (below) are exactly parallel.
The grey lines are parallel to the blue lines and intended to show MRNA, exhibits a repeating (downtrend) pattern.
Moderna MRNA, Daily
The expanded version on the daily has support being penetrated (horizontal blue line) and then ‘spring’ action last Friday as a result.
Of course, it’s ‘what happens next’, that’s the question.
In a prefect scenario, price action would thrust lower for a day or several days and then come back up to test the underside of resistance.
Elder Option Strategy
This strategy is taken from Elder’s book ‘Come Into My Trading Room’, and seeks to use as short-dated options as possible.
Doing so, requires the discipline to wait sufficient amount of time for price action to get into position and for option time value to bleed-off.
Potential Upside
Since we’re already in spring position and price action moved off the lows on Friday, MRNA could continue the upside right back to, or past the downtrend line.
However, with massive (undeniable) fundamentals building buy the day, and MRNA being mentioned specifically in at least one link below, probabilities favor the downside.
Supporting Links For The Bearish Stance
Florida Surgeon General Warns Life-Threatening VAERS Reports Up 4,400 Percent Since COVID-19 Vaccine Rollout
US Says Government, Not Moderna, Should Face COVID-19 Vaccine Lawsuit
New Medical Codes For COVID Vaccination Status Raise Concerns Among Experts
Watch: Rand Paul Grills School Of Nursing Head On Student COVID Vaccine Mandate
US Navy Lifts COVID Vaccine Mandate For Sailor Deployment
Mainstream Media Continues To Push False ‘COVID Heart’ Narrative To Explain Excess Deaths
NFL Players’ Association Urged To Screen for Heart Issues Over Vaccine Side Effects
WHO Suddenly Shelves Plans For Second Phase Investigation Into Origins Of COVID-19: Report
Watch: CDC Director Suggests It Will Never Change Child-Masking Policy
Rand Paul Introduces Bill To Halt Funding For Hospitals Denying Care To The Unvaxxed
Welfare State Weakens… 30 Million Americans Are About To Lose ‘COVID’ Food Stamp Handouts
IMF Says World Needs To Prepare For The “Unthinkable” After COVID, War In Ukraine
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.
Intel’s a dog … and has been for a very long time.
How do we know that? The price action itself, tells us.
Looking at the weekly chart of INTC, overlaid with the SOXX (thin black line), it’s clear, things literally went south for INTC, right around April, of 2021.
Intel reversed while the sector, the SOXX continued higher.
It’s what happened next, that’s important.
Intel INTC, With SOXX, Weekly
Note how the SOXX has rebounded since mid-October last year while Intel has remained flat.
Even with all the market manipulation to keep the major indices trending higher, having the public thinking ‘the consumer is strong’, INTC has languished.
This lack of upward price action in a rising market, indicates significant weakness.
Has Intel reached a bottom? This is the ‘dip’, isn’t it?
As always, anything can happen and INTC, could launch higher from here. However, it’s not likely.
It’s a juggernaut and at the moment, heading lower.
All of which brings us to the set-up: Options trade to the short side.
Intel INTC, Daily
For a viable Put trade, at least two criteria need to be met (with downtrend already established) and those are: Option time bleed, and what’s called ‘price instability’ or a ‘test’.
The daily close of INTC, shows a prior set-up (‘Test’) and now, at the far right of the chart, forecasted action.
A possible time for the ‘test’ if it occurs would be this coming Wednesday as that makes it ‘Day 13’ from the high on February 3rd.
That day would also coincide with the Fed minutes being released at 2:00 p.m., EST.
Note: When Fibonacci time counts are involved, it was determined years ago (by my firm), when the U.S. market is closed for a holiday and the rest of the world markets are open, it can (and sometimes does) count as a Fibonacci trading day.
Therefore, with world markets open this Monday, and the U.S. closed, it may still count as a Fibonacci trading day.
That in turn, could make this Tuesday ‘Day 13’ (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.
Newmont (NEM) price action’s working its way lower to a ‘free-fall’ area; shown below.
Depending on behavior if or when it gets to this area, there could be an acceptable set-up to execute an ‘Elder-type’ Put option (not advice, not a recommendation).
That Put strategy has already been discussed but for those who may be new, it’s basically a short-expiration, out-of-the-money Put for maximum (potential) gain.
A completely counter-intuitive approach to the standard method of long-dated entries, then ‘wait’ while the value burns down to nothing.
Newmont Mining NEM, Daily
The compressed chart has the big picture; Newmont’s all-time highs were reversed on April 18th, 2022.
It’s currently in the process of finding its long-term bottom which is possibly far away from current levels.
The next chart gets close in on the potential set-up.
If price action follows its current down-trend, NEM may reach the potential free-fall area late next week.
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 Put entry on Chevron CVX, was admittedly, late to the party.
From a trading and strategy perspective, when CVX, announced its ‘buy-back‘ program, that was the appropriate time to go short (not advice, not a recommendation).
With that in mind, the Put option detailed in the above link was closed towards the end of yesterday’s session.
Chevron could still collapse from here and that may ultimately be the outcome.
However, before that happens, as shown below, the more probable event is to come back up for a test of underside resistance.
Chevron CVX, 4-Hour
Note how thrust energy (blue arrow) to the downside is dissipating.
The chart below shows a potential outcome, if (and it’s a big if) CVX, is still in a significant reversal.
Examples presented on this site are just that: Examples
They show one “old-timer’s” perspective on the market and current events.
The examples can be used (or not) to aid in understanding market behavior or to show a different perspective on how to approach the current environment.
To paraphrase Dr. Alexander Elder:
‘There are many ways to make money in the markets … and even more ways to lose it’.
It’s about 20-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.
Events like this, tend to indicate the end of a move.
Then today, Chevron (CVX) cracks.
In keeping with Elder’s method of trading options, as was done with the Delta Airlines (DAL) trade, the chart is documented below.
Note: The Delta Put expired with no revenue on the trade. This is how the method is implemented. Many small losses that are peppered by a significant gain (not advice, not a recommendation).
Chevron CVX, Daily
Over the next week, CVX could get ahold if itself and stabilize … or it could completely fall apart (not advice, not a recommendation).
We can already see, it appears to have posted a double top with a swift reversal.
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’s a good thing we’re not listening to the financial press as the market’s ‘Call The Fed’s Bluff’; we would’ve missed the set-up.
Let’s bookmark this post (like the last one), come back in July or so, and see how the poker-hand with The Fed played out.
Three guesses on who’s going to win and the first two, don’t count. 🙂
With Delta, it’s not the Fed they have to worry about. A series of events were set in motion (i.e., pilot ‘shortage’) that may not get fixed for years to come.
Moving on, let’s take a look at what the price action of Delta (DAL), is telling us.
For brevity, we’ll go straight to a marked-up (and time compressed) weekly chart of DAL.
Delta Airlines DAL, Weekly
DAL spent nearly a year building a ‘terminating wedge’ before breaking down during February of 2020.
Hmmm, February of 2020, what was happening back then?
That breakdown, coupled with the terminating wedge, and it’s almost as if someone knew something; time enough to position massively short or buy put options.
Subsequent retrace off the 2020 lows, were at lower and lower Fibonacci levels … with the current retrace at 50%.
The Options Trade
Dr. Alexander Elder describes (Come Into My Trading Room) one way to trade options that few attempt.
That is, instead of buying long dated options and then waiting for the slow burn down of capital, the lesser-known method is exactly the opposite.
In his book, he describes buying short-dated OEX (S&P 100) Put options for 3/8ths … back in the day when the market traded in fractions.
Two days later, he sells the options for 17, a 4,433% gain.
Taking that method and applying it to the daily chart, we have the following.
Delta Airlines DAL, Daily
On Friday, there was a huge gap-lower, open.
Price action spent the rest of the session attempting to close the gap. Volume increased substantially from Thursday’s session (up +46%)
Yet, price action was not even able to touch the lows of that session; Friday’s high of 38.29, vs. Thursday’s low of 38.32.
It’s a nuance that may have meaning or not.
The Short Trade
As shown on the chart, a position was opened with a Put; strike at 35, and priced (at entry) at 0.09 (not advice, not a recommendation).
Following Elder’s method, the price and short expiration, says there’s no hope for this trade.
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® 