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.
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 no secret, Warren Buffet has been selling BAC, shares for some time; more recently, here.
The hard part is, how does one map that to price action?
Or does his selling have any material effect.
From a Wyckoff standpoint, we put that information in the background.
It’s there, we’re aware of it, but the focus is on price action itself.
So, let’s take a look.
BAC is a heavy weighting the in financial sector, with index tracking fund XLF, as a good vehicle for analysis.
That ETF just printed an all-time high this past Friday.
Financials XLF, Daily
Friday’s Fed announcement could be a significant infection.
Of course, the media is all aboard with a September cut, providing endless opinions on how to trade something that has not even happened.
What we’re looking for on this site, is some evidence of a reversal. We’re looking to see if price action stalls in not only the XLF, but the other major sectors as well.
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.
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.
Providing fuel to the interest rate fire of yesterday’s post, we have this and this. Website link here.
Adding to that, is the ‘big picture’ on US debt, i.e., it’s “unsustainable”, link here.
The strategy on the debt, is to have the situation (known) in the background; so, when things really implode, one is not caught ‘off guard’ (not advice, not a recommendation).
For example, what’s going to happen to ‘rate’ related commerce (like auto sales) if interest rates launch higher?
Short Covering
Short covering on a mass scale is not a bull market phenomenon.
In the past week or so, we’ve had another near record amount of buying, links here and here.
All Quiet
As of this post (7:45 p.m., EST), the markets are holding steady.
The only position open, is short Carvana CVNA-25-02, with a stop, nearly hit on Friday, at 304.61 (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.
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 SOXX, hit resistance, stopped, dropped, and could be rolling over for more downside … or not.
Maybe there’s something else developing.
Something like a set-up to penetrate resistance, creating a Wyckoff Up-Thrust (not advice, not a recommendation).
Semiconductors SOXX, Daily
The magenta dashed line is the 38.2%, retrace for the entire downside move; from the top on July 11th, 2024, to the lows on April 7th.
Note the potential Fibonacci time correlation, just before the Fed announcement on May 7th.
As with Carvana (CVNA), we’re nearing a potential inflection.
Also note, Carvana has dropped from the current resistance area (around 240) making that level the more probable area for an up-thrust, rather than yesterday’s 310-location (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® 