Category Archives: Federal Reserve

The Fed’s Next Move … Rates Up

February 19, 2024 By in Bonds, Federal Reserve, Interest Rates, NVDA, TLT, Uneducated Economist, ZeroHedge

What A Surprise!

The Fed’s next move may be to raise rates, not lower them.

For those following this site, there’s no surprise. Over a year ago, we had this:

“Like ‘bread and circuses’, the ‘pivot’ discussion is a distraction … “

Incorporating the potential of rates higher into one’s analysis, ‘internalizing’ it as Uneducated Economist says, positions one completely out of the herd, able to view events objectively.

All of which brings us to the bond market, specifically long bonds TLT.

Long Bonds ETF, TLT Daily Close

Updates from this site are noted.

Until price action shows otherwise, rates are likely to head higher, not lower (bond prices down).

Therefore, using that strategic premise, the upside breakout (above resistance) in bonds had a higher probability of downside reversal than upside continuation.

No. 1 : The Usual Suspects

In the update with the above name, link here, scroll down to bullet item No. 10 for analysis.

The potential for a false breakout was correctly identified,

No. 2: Bond Reversal ? … Ruh, Roh

First, there’s potential, then, the actual.

The next update, link here, presented among other things, the odd occurrence of both bond and overall markets moving down simultaneously.

The inference being, the 40-year bond bull market is over and higher rates are more likely (not advice, not a recommendation).

Then, The Fed and Nvidia

The next few days may be quite interesting.

Nvidia (NVDA) earnings are due after hours on Wednesday and the Fed minutes are scheduled for release earlier (2:00 p.m., EST) the same 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

Biotech “Bottled Air”

January 31, 2024 By in $SPSIBI, Biotech, DHI, Federal Reserve, LABD, SPBIO, Uneducated Economist, XBI

Nothing (or not much) Holding It Up

We’re still a few hours away from the Fed announcement and it’s already high anxiety in the market.

D.R., Horton (DHI) has retraced about 38% of its move and is testing the underside of breakdown resistance.

Over on the ‘Little, or no P/E’ side of the market, biotech XBI is coiling, building (downside) potential in its own on-going reversal.

Biotech XBI, Daily

The last update on biotech XBI (link here), said to watch for a false breakout.

The chart shows the result. The breakout did not last; we’re congesting just below resistance (blue line).

The latest post from Uneducated Economist talks about the potential for lower rates, i.e., probabilities are low.

Incorporating that possibility into the above analysis, it suggests the XBI move from last November to the end of December, is essentially built on “bottled air” (not advice, not a recommendation).

The retail side of the market appears to be positioned long, expecting lower rates.

What happens if that does not happen?

Stay Tuned

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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.

Potential Short: D.R. Horton

January 27, 2024 By in DHI, Federal Reserve, Interest Rates, Real Estate, ZeroHedge 3 Comments

Watch For Retrace

We’ve all heard, it’s 80% planning and 20% trading.

So it is, with D.R. Horton (DHI).

As a reminder, this site addresses strategic positioning first, then tactics, and then focus. See the About section for more.

Strategy Review

Unless the charts say otherwise, rates are going higher, not lower. Gold and silver will likely go lower first, before going higher, supply destruction and resulting price increases will continue (not advice, not a recommendation).

D.R. Horton: Possible Retrace

One of two scenarios are likely. 

DHI could continue its decline, straightaway. Monday’s open could be gap-down, posting down, no looking back.

The next scenario, a retrace to test underside of resistance. As the chart below shows, that underside is right at 38.2%.

DHI, Daily

The chart presents ‘potential’ only. If the market is well behaved, a retrace to test is a reasonable expectation.

If there’s a retrace, Fibonacci Day 8, from the 1/22/24, high is this coming Wednesday, the 31st.

That day just so happens to correlate with the Fed interest rate announcement due out at 2:00 p.m., EST.

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.

Interest Rate Shakedown

January 16, 2024 By in Bonds, Federal Reserve, Interest Rates, TLT, ZeroHedge 2 Comments

The ‘Uh Oh’ Moment

Now it begins, sowing the seeds of doubt.

‘First rate cut may be later than expected.’

How about be prepared for no rate cuts this year and more likely, continued elevated rates or higher rates (not advice, not a recommendation).

Let’s not forget we’re over a year now from the release of this post, postulating there would be no ‘Fed pivot’.

So far, no pivot and no cut.

Now that nearly everyone’s positioned on the ‘rate cut’ side, it’s time for the shakedown, possibly beginning today.

Long Bonds TLT, Daily

Just over two-weeks ago, this post noted to be on the watch for a failed breakout.

Looking at the result, we’re now below the prior breakout resistance, a bearish sign.

The chart of bonds itself is telling us (unless it’s reversed to the upside), there’s an increased chance rates are more likely to move higher (not advice, not a recommendation).

Note the ‘persistence’ to the downside of the MACD indicator. This tends to happen when sustained pressure is being applied … selling pressure in this case.

Stay Tuned

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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.

Biotech Squeeze … Terminal ?

January 10, 2024 By in $SPSIBI, Biotech, Federal Reserve, LABD, SPBIO, XBI 1 Comment

At The Extreme

Has the biotech squeeze been stretched to its limits?

The daily chart of XBI, shows we’re at an extreme, MACD is flat, crossing below the signal line, second time in the past five trading days, and price action is at well-established resistance.

Still Waiting

What has not happened, is printing a new daily low.

As of this post (11:30 a.m., EST), XBI is trading just above yesterday’s low of 92.00.

Biotech XBI, Daily

At 3:15 p.m., EST, New York Fed president John Williams is due to speak.

It may or may not be a catalyst for what happens next.

However, it still remains to be seen if there are any rate cuts on the horizon. So far, none.

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’s Technical Exhaustion

January 6, 2024 By in DUST, Federal Reserve, GDX, GDXJ, GLD, Gold & Silver, Gold Miners, JDST, Richie Naso, Uneducated Economist, ZeroHedge

Divergences, What Happens Next?

Is gold about to blow up?

Blow-up breakout? … No, blow-up breakdown.

As we’ll see in the chart of GLD below, double bearish divergence on the daily.

At time stamp 6:10, here, in the Fed’s own words, rates are not coming down, they’re likely to go higher.

‘We will need to increase the Fed’s funds rates further …’

Not forgetting bonds, may have already reversed, here.

Then, liquidity crunch … yet to appear in full force.

Next, a reminder, herd instinct is strong, link here.

Gold GLD, Daily

On a daily basis, we have a double bearish MACD divergence coupled with a terminating wedge.

As veteran trader Richie Naso says, ‘It’s all about patterns‘.

Let’s add intrigue, here (time stamp 13:58), finding out what happens in a liquidity crisis, i.e., ‘Sell everything.’

Stay Tuned

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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

Bond Reversal ? … Ruh, Roh

January 3, 2024 By in Bonds, Federal Reserve, TBT, TLT, Uneducated Economist, Wyckoff 3 Comments

This Time’s Not Like Last Time

The market’s down; bonds down at the same time.

Wait, what?

If the Fed does not lower rates, then bonds risk a reversal to the downside (not advice, not a recommendation).

Of course, no one expects that to happen. No one.

Well, maybe there’s at least one, link here: 

‘No pivot anywhere in sight.’

Bad News, Bonds

It gets worse when looking at TLT. As we’ll see below, the chart has a (potential) repeating set-up, link here.

Long Bond Proxy TLT, Daily

The set-up is not complete and may well diffuse into nothing.

However, if it does not and we get back below the magenta resistance line, there’s likely to be some serious confusion in the markets.

Wyckoff said a century ago, those incorrectly positioned in the market, provide the fuel (as they panic and exit) for a directional move.

Just think about who’s (potentially) on the wrong side and what side that is, i.e., the bullish side.

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 Miner’s Failed Breakout

December 31, 2023 By in Federal Reserve, GDX, GDXJ, Gold & Silver, Gold Miners, JDST, SLV 3 Comments

Focused Attention

It can be said, nothing gets more attention on ‘The Street’, than a failed move.

If so, that’s what we have with the miners, specifically the Junior’s, GDXJ.

There’s been a case of ‘mystery volume’, showing up in the leveraged inverse fund JDST, link here.

Now, we’ll look at the GDXJ, technical indicators, presenting the possibility for a sustained downside (not advice, not a recommendation).

Junior Miners, GDXJ, Daily

The failed upside breakout is clear.

In addition to the reversal, MACD is posting bearish on both the lines and histogram. Those indicators have just crossed to the downside.

Let’s not forget we’ve also had (potentially) the largest hype, Fed imaginary pivot, move in market history.

For the miners at least (along with silver), they’re saying, if there’s any ‘inflation’ to be had, it’s not happening now.

Maybe later.

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

‘$30-Silver’ … Nowhere In Sight

December 30, 2023 By in Car Questions Answered, Federal Reserve, Gold & Silver, Gold Miners, Interest Rates, SLV, Wyckoff

It May Still Get There … But First

Just as this report said nearly a year ago, there’d be no Fed pivot (still waiting), this article from seven months ago, prompted a mental note to revisit the ‘$30/oz’, silver prediction.

Before we address that, let’s go way back to this post over three-years ago, detailing how the miners, and silver for that matter, are not (yet) in a sustained bull market.

Now, we have the Fed ‘pivot’ set-up and the metals (especially silver) posting a non-confirmation.

The (non) ‘Pivot’

Obvious to only a few (like Uneducated Economist), is how the ‘pivot’ narrative is a false. 

Typing in ‘Fed pivot’, into YouTube turns up a massive list. Everybody’s jumping on board. 

That in itself, may be cause for alarm.

From a strategic standpoint, we’re not in Kansas anymore.

The 40-year long bond bull market (1980 – 2020) has been broken. Higher rates for longer, like maybe another forty-years, may be the norm (not advice, not a recommendation).

Silver Still Down

Silver (SLV) is far below its 2011, highs: approximately -55%. In addition, SLV, may be on its way to test the lows of SLV, 12.50 – 13.50. More on that in another post.

Silver SLV, Daily

The chart shows we’ve had a false breakout (Wyckoff up-thrust), then reversal, and now an apparent test that has (so far) pivoted lower.

The inference is, the silver market’s not buying the Fed ‘pivot’ and subsequent inflation narrative. 

It’s possible, the economic collapse narrative like here and here, is weighing more on silver … a narrative that’s actually happening. 🙂

Stay Tuned

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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 Usual Suspects

December 16, 2023 By in $SPSIBI, AMT, Biotech, BOIL, Bonds, CVNA, DRI, Federal Reserve, Food Supply, Genesis 41, GLD, Gold & Silver, Gold Miners, IYR, LABD, Natural Gas, Real Estate, Semiconductors, SLV, SOXS, SOXX, SPBIO, TBT, TLT, Uneducated Economist, UNG, Usual Suspects, WEAT, Wyckoff, XBI 1 Comment

Everything Happening At Once?

Not in any particular order; not advice and not a recommendation.

No 1. There (still) is no Fed Pivot. Seriously, have rates really, actually been lowered? Everyone has a huge case of ‘normalcy bias’. i.e., what the Fed did last time will happen this time.

The 40-year bond bull market from the 80’s, ended in 2020. We’re in a different paradigm now.

No. 2 Natual Gas UNG, is reversing. We’ll see whether or not there’s going to be a supply disruption.

No. 3 The semiconductors SOXX, now have a monthly bearish MACD divergence; daily and the weekly indicators posting even to prior tops (as of Friday’s close). 

No. 4 Components of biotech index XBI, are being shuffled around faster than deck chairs on the Titanic … or, the Olympic 🙂

Seems like a mad dash to add/remove, increase, reduce equities to prop things up. We’ll see how that turns out. Currently, XBI is right at resistance level, 86.50 – 87.0

Here’s just one example from an index, riddled with equities that have no P/E.

No. 5 Carvana is very close to posting new highs and potentially, running the stops.

No. 6 Has Darden Restaurants, topped out? 

The consumer is certainly tapped-out and no-one ‘needs’ a restaurant.

No. 7 Wheat is reversing; It is and has always been about the food supply.

No. 8 Gold, GLD, is currently not going higher (look at the divergences); silver (SLV) is in a major non-confirmation, down nearly – 55%, from all-time highs.

During the 1980s inflation, precious metals moved (upward) together.

Silver looks like it’s responding to the destruction/collapse of (economic) demand.

No. 9 American Tower (AMT), number two in the IYR index, posts a clear false breakout and reversal. 

If rates really are going (materially) lower, interest rate sensitive real estate should continue going higher, right?

No. 10 Which brings us to the bond market, TLT. 

Price action broke above established resistance, currently hovering above that level. 

It’s at The Danger Point®

We can see the set-up, a price action pattern repeated time and again, between the lower and upper blue lines, called a ‘Spring-to-Up-Thrust.

While the media laughs at the bears, let’s just see how this all works out.

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