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.
Remember, markets typically move in the opposite direction first after the Fed, then resume their main trend.
On Friday, markets were generally higher on interest rate hopes. It’s called ‘hope’, as the Fed’s not actually done anything.
Let’s word that more accurately. The bond market has not (yet) told the Fed to lower rates. When it does (if it does), they will follow and present their case as if they are leading the market.
Decades ago, Robert Prechter Jr., in a research paper, proved this point. More recently, Ed Dowd repeats the fact, link here (time stamp: 37:48).
Markets were higher, including the SOXX, covered here, and in this update, airline sector Delta (DAL).
Delta Airlines, DAL, Daily
If there’s any one chart showing why this site primarily works the short side, this is it.
The last major move was an impulse downward, taking less than three-months.
The corrective move against the trend, has so far been nearly five months in choppy overlapping action.
DAL, finished on Friday at the Fibonacci 78.6%, retrace level (not shown). Unless the market decides otherwise, we’re in a terminating wedge.
Currently short DAL, as DAL-25-03, with stop just above Friday’s high (not advice, not a recommendation).
Weekend Wait
Now, the worrying starts … we can almost write the mainstream media script for the next few days.
Why will the Fed need to lower rates? Is unemployment going to continue higher? What about all the mass layoffs? How will the consumer be affected … and on and on.
As a reminder, ‘alternate’ (real) unemployment numbers are here. We’re already at 25%, Depression era levels.
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.
UBER’s earnings were stellar; why’s the stock heading lower?
From a Wyckoff analysis perspective, the question’s not relevant.
We pay no attention to financial news, or news of any kind.
The real question, ‘What’s the market saying about itself?’
UBER, Daily
The repeating pattern, Spring-to-Up-Thrust, link here.
On a longer, monthly timeframe (not shown), there’s a massive MACD bearish divergence; telling us, opportunity favors the downside (not advice, not a recommendation).
To minimize risk as much as possible, we’re looking for price action to rise into the close, narrowing the distance between entry and stop.
The stop would be (if a trade is placed) at today’s session high (not advice, not a recommendation).
Economic Conditions.
Another interview with Ed Dowd, has surfaced, link here.
As one of the comments noted, ‘this is the best synopsis of actual market conditions presented, to-date’.
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 the past few weeks, it seems like the markets have been whacked with a lot of, ‘the largest, ever’.
Trading in bonds, specifically TLT, is no exception.
While the media and pundits alike, deflect with ‘who’s doing the selling’ (hint: it’s not important), we’re going to look at the harder question of ‘what does it mean?’
Kick-Off, or Capitulation
Borrowing from research and writings of Wyckoff, Weis, and Prechter, when we get such a huge thrust downward (chart below), it’s typically one of two events:
A massive kick-off to much lower prices or a capitulation that washes-out the weak hands.
A bond upside reversal (rates lower) is a common sign of nearing or active economic downturn (not advice, not a recommendation).
In this interview with Greg Hunter, Ed Dowd covers the topic … the expectation for the reversal. However, that interview, was before the massive thrust lower.
Long Bond Proxy, TLT, Weekly
For years, it’s been one failed upside (reversal) after another.
Is this time, different?
The right side (magenta arrows) shows unprecedented thrust and volume.
So far, there has been a weak recovery to 38.2%, retrace of the recent down-move.
If that retrace level holds, with bonds continuing lower (rates higher), it does not bode well for the ‘capitulation’ narrative.
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 markets don’t like uncertainly and that’s just what we have with biotech.
As the chart shows, the question becomes; is it a trend breakout, a breakout and test or a breakout, test, then possible failure?
This interview with Ed Dowd just days ago, paints a bearish picture for the overall markets.
If so, and we apply that scenario to biotech, the odds don’t seem to favor the upside (not advice, not a recommendation).
With that, let’s get to the action.
Biotech XBI, Daily
Last Friday, the 21st, was Fibonacci Day 89, from the November 11th, 2024, highs.
If the trendline is in-effect, meaning the market’s hanging in mid-air in a false breakout, getting back into that trend may result in some dramatic downside action.
On the bullish side, if it’s an upside breakout, ‘normal’ behavior is for a ‘test’ of the trendline.
Either way, both scenarios favor more downside (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.
There are four more trading days left to compete the bar on the 8-Day, chart of Nvidia, below.
What are the chances it continues on higher into resistance?
If it does, it’s the 50% retrace of the entire move from highs on January 7th, to the lows of March 11th.
Then, The Fed
We have a Fed meeting this coming week, 18th and 19th.
Could any announcement be used as an ‘excuse’ to propel the market higher … straight into resistance?
Nvidia Fibonacci 8-Day
Who uses an 8-Day chart?
Not anybody I know 🙂
If Nvidia continues to rally, one would expect the SOXX, to move higher as well … potentially creating yet another short opportunity (not advice, not a recommendation).
Lastly, Ed Dowd
Here’s a link to a recent interview. At time stamp 37:48, he spills the beans on The Fed.
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.
Looking at United Airlines (UAL), with the precise set-up, four-year wedge, measured move, the top, timed exactly at an earnings release, you have to ask yourself …
Was it all part of a (secret) plan?
Wyckoff Writes on Manipulation
Way back in 1910, Wyckoff wrote the following concerning manipulation (emphasis added, quote used with permission).
“Manipulators are giant traders, wearing seven-leagued boots. The trained ear can detect the steady ‘clump clump’ as they progress, and the footprints are recognized in the fluctuations and quantities of stock appearing on the tape.”
United Airlines UAL, Weekly
When looking at the chart, it all makes sense … it just took over four years to play out.
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 last update on Carvana, link here, identified the potential for downside reversal.
That’s what we got 🙂
Now, as we’ll see in the chart below, CVNA is right at the trendline.
Carvana CVNA, Daily
We’re at the trend, but there’s a slight possibility price action will rebound (off the trendline) to the area noted (not advice, not a recommendation).
Let’s add this insight from Greg Hunter and Ed Dowd, concerning the economy, link here.
After watching the interview, judge for yourself whether or not we have recovery higher first, or we head lower, 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.
The real kicker though, is Dowd’s statement at time stamp 34:30 in the link; when the market finally does turn to the downside, ‘It will be quick’ (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® 