Book Value of -$6.56/share; no P/E since at least 2018, if-ever (data, Worden Brothers).
Using that Book Value, if the company was liquidated (theoretically) at this juncture, with 189-million shares outstanding, over $1.24-Billion, would be left unpaid.
Naturally, shorts have moved in and moved in aggressively.
They have collectively sold over 31%, or 33-million (there’s that ’33’, again) of outstanding shares, short (courtesy of BigCharts).
With all the financial carnage, you’d think it’s a no-brainer to be short. However, looking at the chart, there could be trouble ahead for those shorts.
Carvana CVNA, Weekly
It’s likely that with each pull-back from resistance (blue line) the shorts increase and so do the stops.
We have to figure, with over 33-million shares short, that’s huge buying potential.
Barring a bankruptcy (also a possibility) and CVNA, going to zero, shorts have to cover at some point, to close positions.
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.
Back in January, this post was contrary to the accepted (and still accepted) theory, there’ll be a Fed ‘pivot’ when the economy turns south.
‘Like ‘bread and circuses’, the ‘pivot’ discussion is a distraction … keeping the proletariat placated.’
We went south a long time ago and not only is there no pivot, rates are most likely going higher still (not advice, not a recommendation).
A Process Of Iteration
Those accessing this site for any length of time, have seen my trading actions going through a process of iteration in real-time.
Those actions have effectively searched (and profited) from moves, but more importantly, are looking for the market that stands to decline the farthest and fastest.
At this juncture, that market could be biotech and specifically, the SPBIO, index (not advice, not a recommendation).
Biotech SPBIO, Monthly
Depending on if, when, and where the neckline is broken, we have an approximate location for a measured move.
Head & Shoulders patterns, while being high probability, can be subject to failure.
One of the most famous of these in recent memory, was the S&P Head and Shoulders of late 2002.
It was an easily recognizable pattern that failed … only later to find out, the market had been manipulated higher by an entity (buying futures contracts) that had ‘unlimited capital’.
Positioning
As this post detailed, the main position going short the index (via LABD) has already been opened (not advice, not a recommendation).
There have been other additions, but they are nowhere near the size of the original entry.
Hard Stop has been moved up from LABD 17.59 to LABD 18.22 (not advice, not a recommendation).
Highly Leveraged, LABD
There’s no guarantee, 3X Leveraged Inverse fund LABD, will be maintained throughout a potential collapse. Events can change, even while this post is being created.
That being said, what’s happening here is akin to ‘settling in’ on a trade, monitoring price action, trend lines, and support/resistance, to mentally prepare for what could be a sustained move.
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.
‘Professionals don’t look for the challenge, they look for the money’, Dr. Alexander Elder
Right now, the ‘challenge’ is AI; bull or bear, who’s right?
We even have a bearish article out on SeekingAlpha. That means, the sector will probability go higher from here. 🙂
I wrote for SeekingAlpha years ago; had tens-of-thousands of views on my work; was somehow, never paid a dime.
The editors eventually told me, identifying potential market turns to-the-day, was “not suitable” (that’s a real quote) for their readers … so, there’s that.
Follow The (Nat-Gas) Money
Meanwhile, a potential significant reversal was identified in Nat-Gas, link here. So far, it’s progressing under the radar.
Entries have been made in UNG, at 6.64, 6.75, 6.86, 6.89, with a hard stop moved up to UNG 6.71 (not advice, not a recommendation).
Next, we have a potential reversal in Real Estate.
Real Estate IYR, Daily
Price action’s now at Fibonacci Day 8, from the low on August 21st. In addition, it’s at the 50%, retrace level from the high on July 27, to the aforementioned low.
We’re in a high, potentially, soon to be much higher, interest rate environment.
The (Interest Rate) Black Swan
The general public and investing professionals alike, think as the economy tanks, the Fed will lower rates.
It’s a widely and strongly held belief. After all, it’s always worked that way.
What if it doesn’t happen this time.
The economy tanks and rates move even higher?
it’s a possibility to consider.
Positioning
As one might guess, I’m already short this sector via DRV (not advice, not a recommendation).
Entries were made yesterday and today at DRV 48.42, and 47.66 respectively.
Hard Stop, is at the session low of DRV 47.00 (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.
With today’s outside-down (as of 2:43 p.m., EST), that makes it two key reversals for GDXJ, in the past five trading days.
While it looks like the whole herd is focused on the new mania, Artificial Intelligence, back at the ranch, the miners are painting an ominous picture.
Rendezvous With Destiny
The first two-minutes and ten seconds, at this link, are all that’s needed to get the idea of what’s likely to come.
The market recovered (fairly quickly) from 1987 … this time, may indeed be different.
The Elephant Sleeps
Ah, yes. The elephant no one talks about … or more accurately, are afraid to talk about.
Three links here, here and here, show us the elephant may be about to awake.
From the bottom, May 25th to now, is a Fibonacci 13-Days.
Is that important?
Here’s a prior analysis on Real Estate IYR, that shows how Fibonacci can identify the pivot point, trend and/or trading channel.
Now, back to the Juniors.
The mining sector appears to be under pressure. Each attempt to rally is being thwarted.
Compressed view of the channel, below.
The Fed announcement at 2:00 p.m., EST tomorrow, may or may not have any material effect. The sector may just continue lower …. slowly, without much fanfare (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.
So, how’s any business going to operate profitably in an environment that’s systematically being disrupted?
Those that could come up with a plan (for their company or business) in such an environment, i.e., the ‘competent‘, are leaving in droves; letting the slackers, back-biters, corporate gossips, and the incompetent, finally have free rein.
This phenomenon likely applies to all major businesses. We already see the entrenchment.
Then, The Fed
Then, there’s the Fed. Surely, when they see how bad things are, they’ll lower rates; Right?
‘When the Fed realizes the economy’s in a recession, they’re going to lower rates‘.
That’s ‘normalcy bias’. We’re in a new construct: There’s no Fed ‘pivot’, rate lowering, or any ‘accommodation’ in sight.
On top of that, some have figured out, things aren’t quite right at the Fed; looks like different ‘forces’ are at work.
Go to time stamp 10:50 at this link (warning, contains profanity).
Then, The ‘Stackers’
So, we’ve gone from stacking toilet paper to stacking what’s thought to be precious metals.
First, it’s fake silver … and then, even the Perth Mint got into the act with ‘diluted’ gold bars.
As stated, years ago, during the Texas Freeze, when it really hits, the grid goes down, nothing’s working, it’s freezing outside, precious metals are nowhere on the list (not advice, not a recommendation).
Then, The VIX
As if all of the above was not giving us clues that something’s about to happen, there’s the VIX.
If you believe the talking heads and ‘finance’ YouTube sites that claim the debt deal will cause massive inflation, well then, let’s pose the following question.
If that was true, why are gold and silver not responding in a huge bull market with upward leaps (a la 1995, S&P) each day, then week and month?
Those close to the market always know something; their actions show up on the tape.
It could be we’ve already past the top in spending …. just by market pressures alone. It’s possible, all that extra allocated ‘pork’ may never get implemented (not advice, not a recommendation).
Lastly, The Miners
The miners GDX, GDXJ, have been in a bear market for years with all-time highs (GDXJ) during the first half of 2011.
Since then, the sector is down over 72%
It’s interesting, that this high stress, physically demanding industry with risk of danger ever present (here, here and here) reached a bear market peak in mid-2020, just as certain ‘items’ were being mandated.
Junior Miners GDXJ, Daily
As the competent leave the general workforce, would the resulting lack of accountability make itself known first in professions where stupidity causes direct effect in reduced production and/or increased accidents?
The GDXJ is at an interesting juncture.
It’s currently under resistance (blue line) that has already been tested.
At the end of the session today, we’re a Fibonacci 8-Days from the low set on May 25th.
If the index is going to reverse lower from here, this is a likely place to start.
Another attempt at resistance would indicate more upside pressure than anticipated; any existing short positions would be closed (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.
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.
There are nine other supplemental data points for the economic mayhem, collapse, collapse-in-progress scenario; they are listed at the end of this post.
For now, we’re talking about real estate and specifically the proxy for the sector, IYR.
Real Estate IYR, Weekly
As stated in the last post, we’re going to follow-up with a potential IYR, downside reversal by covering three more technical points; Fibonacci time correlation, thrust energy and trading channel.
First up: Last week completed a Fibonacci 34 (-1 week) time frame that may result in a reversal into a trading channel (shown on second chart).
Upward force (Thrust Index) declined significantly over the prior upward push during the week of 1/13/23.
The weekly chart has been compressed and trading channel lines added.
Internal trendlines are printed as grey dashed lines.
As shown, we’re at ‘Week 34 (-1)’.
If this market’s in reversal and adhering to a Fibonacci time sequence, we could see an immediate reversal or another minor high next week to make it an even 34 or go one additional week to make it 34 (+1) weeks.
Either way, we’re at The Danger Point®
The 1929 – 1932 Trading Channel(s)
Here’s a bit of insight you’ll not find anywhere else.
Research and data gathered by my firm, has shown markets tend toreverse just before, during, or just after a Holiday Week.
In our case below, The 1929, all time high was 379.61, posted on September 4th; the Tuesday following the Labor Day Weekend.
The final low and subsequent reversal was 41.81, posted on July7th 1932; the Thursday following the July 4th Holiday:
There are at least three main trading channels in effect for the entire (nearly) three year down move.
Trading channels are an old and repeating characteristic of the markets.
Real Estate Re-Cap
The all-time high in real estate IYR, was 116.89, posted on December 31, 2021, the Friday before the New Year’s Weekend.
Since then, there have been several trading channels in effect; at this juncture, we may have yet another.
With the data links provided at the beginning and the links at the end of this post, sustained price action to the downside is more probable (not advice, not a recommendation).
This coming week is likely to be quite interesting as the Fed continues on its path of price and demand destruction.
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
Addendum
Congratulations on reading this far. You must be serious about your work. Supporting data for the bearish case is below.
‘Some of the best market traders are former Marines.’, Prechter
That’s a paraphrased quote from Robert Prechter Jr., given during an interview in the early 1990s.
The inference: Marines succeed at trading because they have been conditioned to endure and perform while being in pain … physical and mental.
On the other hand, the financial press, being ever so helpful during this unprecedented collapse, is all too happy to help analyze the situation by catastrophizing on how ‘painful’ the market feels.
If we go to Jerimiah Babe at time stamp 1:36, the mainstream press is still touting ‘The consumer is strong’.
In other videos, Babe, has shown how devastated the real estate market really is … ‘boots on the ground’ reports at vacant malls, empty parking lots and new (unoccupied) housing developments that stretch for miles.
With that backdrop, let’s look at what the price action of real estate is telling us … is the consumer strong?
Real Estate IYR, Weekly
There are so many things happening in IYR, it will probably take several updates.
At this point, price action exhibits the following:
Currently in Wyckoff ‘Up-Thrust’ condition, potential reversal
On a close basis, IYR has retraced 38.2% of its entire move.
Repeating trend line(s) underside test.
Trading channel that’s a Fibonacci 34 (-1) weeks wide.
For the week just ended, Force Index is divergent (54.7%, weaker) than the last push higher.
We’ll look at the first three of those, below.
As the market came to a close on Friday, price action pushed through established resistance (and axis line) to end the week higher.
Price action’s in Up-Thrust condition, The Danger Point®
Next, we have on a close basis, a Fibonacci 38.2% retrace as well as testing the underside of a resistance/trend-line.
In the next update, we’ll discuss the possible trading channel and the pressures (Force Index) behind the last move higher.
There Will Be Great ‘Wringing Of Hands’
As always, anything can happen in the markets. The above is not advice or a recommendation.
Next week, we can expect the Usual Suspects to come out and provide their ‘expert analysis’ on what the Fed is likely to do or not.
The Fed on the other hand, has repeatedly said what’s it’s going to do; that is, raise rates.
Interest rate sensitive real estate already appears ready for 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.
First, we’ll review oil; tomorrow, we’ll look at gold.
From an intuitive standpoint, you can almost feel it.
The oil and gas sector has launched to unsustainable highs.
Behemoths like Exxon (XOM) with its 63,000 employees have gone from below $30/share to above $110/share, an increase over 280%, in just two years.
In the history of the equity, going all the way back to 1984, that’s never happened.
Even in 1987, before the crash, XOM was up for the two-year period, a paltry 108%, by comparison.
Now, data is coming in nearly by the day about collapsing demand, layoffs accelerating, and inventories piling up.
The latest from Steven Van Metre, at time stamp 4:25, discusses just how fast the downdraft is, and will be.
Important Note:
Before we leave the Van Metre link above, at time stamp 8:50, the assertion is made of what the Fed will do when slower growth data comes in. i.e., interest rates will be halted or lowered.
Nassim Talib called this kind of thinking “Normalcy Bias”.
The opinion of this site is, it’s a trap. Thinking what happened last time, will happen this time.
Let’s mentally bookmark this post and come back six-months from now to see what happened.
We’re in uncharted territory and other agendas are at work.
Like ‘bread and circuses’, the ‘pivot’ discussion is a distraction … keeping the proletariat placated.
Demand Collapse
We’ve got demand collapsing on a daily basis right in front of our faces and yet, it’s a big mystery (to some).
What’s not known, is how the general population will react to undeniable truth when it finally hits, en masse.
We have a good hint of what’s in store as reported by Jerimiah Babe during the first minute of this report.
Moving on to the Oil & Gas Sector.
Oil & Gas XOP, Weekly
The weekly chart shows the multi-year resistance area that was tested (and rejected) back in mid-June, last year.
The next chart shows we also have a terminating wedge.
Price action has come back to the lower boundary; suggesting a breakdown is a probability.
If we get a breakdown, measured move support is identified at approximately -47%, below current levels.
Strategy & Trading
Obviously, the charts paint a bearish picture.
Over the past week, XOP was covered here and here.
The first link discussed how price action was very close to making a new daily high. That happened the next session (Friday) and indeed, it had Wyckoff ‘spring’ characteristics.
Price action moved higher and closed higher for the day, but it did not post a new weekly high … keeping the bearish case on the table.
A popular leveraged inverse fund is DRIP (not advice, not a recommendation).
At The Close
As this post comes to a close, a quick check on ZeroHedge turns up this: ‘Tipping Point‘
We’ve jumped over ‘recession’ and have gone straight into crisis and depression.
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® 