At least, that’s what the media wants us to believe. The CPI is out, and ‘inflation’ has slowed.
The problem is, as Michael Cowan stated in this update (he’s done the work), from here, it does not matter what the Fed does.
The decline (crash) or whatever you want to call it, is baked in the cake.
Once deflationary forces start, it becomes a juggernaut.
The previous update on gold (GLD) showed in multiple time frames, upward thrust energy is dissipating; in at least one case, (weekly) it’s also divergent.
Now that we’ve had yet another blip higher, as expected, it’s rabid bullishness in the gold camp.
So, let’s look at what GLD, is actually doing. What does the market say about itself?
Gold (GLD), Daily
One thing is for sure; GLD, is at The Danger Point®
If GLD can’t hold above (and move above) this level, it may be in serious trouble.
Let’s look at it a different way … the terminating wedge.
A ‘wedge’ is typically the last pattern in a move up or down, hence the name.
As this post is being created (12:23 p.m., EST), GLD continues to decline from its open; currently sitting right at the resistance (potential support) level at the 168-area.
In a separate market, biotech SPBIO, has completely reversed its opening spike and is now posting lower.
We’re still maintaining the LABD-22-14 trade (not advice, not a recommendation).
Today’s CPI print and resulting price action, may be the kick-off to an overall sustained and persistent decline.
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.
From the date of the second link above in April, this year, gold (GLD) is down about -8.5%.
Not exactly a crash but definitely not a ‘paradigm shift the world has yet to fully process’.
Just from a contrary standpoint, if ‘everybody’s doing it’, there must be something else going on.
Let’s take a look at the actual facts, the price action, and see what it’s telling us.
Gold (GLD), Quarterly
Looking at the big picture first; the quarterly chart.
Elder’s Force Index (shown in the middle section) has been expanded to detail the thrust energy behind the move(s).
It’s important to note, for at least the past 10-Quarters, two and a half years, the upward thrusts have been successively declining in energy.
That decline is highlighted below.
Next, we’ll drill down to the monthly chart.
It shows GLD, trended (slightly) higher for at least sixteen-months, before breaking down.
GLD, Monthly
Now, as the right-most magenta arrow shows, we’re at the test of underside resistance.
Tests may pass or fail; obviously, what happens next is important.
Also note, as with the quarterly, upward Force Index on the monthly, is declining.
We’ll take it one step further and go the weekly … it too, has declining and also diverging upward thrust.
GLD, Weekly
Ok, you talked me into it. 🙂
Let’s go to the daily and see the same thing.
GLD, Daily
Does all this mean gold will immediately go lower at the next open?
The short answer … it’s not known. However, from a probability standpoint, lower is more likely than higher.
No ‘Capitulation’
There’s nothing to indicate downside capitulation.
Nothing like the ‘changing of hands’ that took place this past March 8th, here and here.
It appears we’re still in the initial stages of a long-term downside reversal.
Downside? … How’s downside, even possible?
‘What kind of idiot comes up with that type of analysis?’
Moving Parts, A-Plenty
Every day, we see things going on in the background that could not be known or fathomed; like missing $80 Trillion?
All it takes, is for some kind of sovereign debt or derivatives blow-up, requiring that country to sell its assets like gold, silver, oil, grains and so on.
A huge dump on the gold market, would of course trigger stops and that in itself, could result in a contagion of selling.
If or when it happens, the downside might be temporary like the Flash Crash of 2010, or oil going negative, or it could be longer.
The ‘powers’ don’t seem to be too concerned with precious metals demand, prices, and low stock of physical at the commodities exchange(s).
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 fact, Wyckoff’s stock market training course, first published in 1934, (still available), says that until you can ignore the financial press completely, ‘You will never be successful in the markets’.
Price action itself, properly interpreted, will tell you where to look for the opportunity.
The Ponzi Implosion, Cometh
The market is littered with Ponzi schemes. Some have already imploded, CVNA, HOOD, Crypto; some have not.
Concerning Crypto, here’s an excellent update from Michael Cowan. Buried in that update, at time stamp 4:58, looks like HOOD, may be in even more trouble.
Biotech is in a class of its own and was discussed in yesterday’s update.
For gold, we’re going to look at the Junior Miners GDXJ, and last week’s action.
Junior Miners GDXJ, Daily Close
The Junior’s are the weakest in the sector; therefore, that’s where we look for a short opportunity (not advice, not a recommendation).
To move higher, above resistance, normal market behavior, is to come back to the lower blue line (i.e., support) to gain enough energy to move higher for a breakout.
To move lower, normal market behavior, is to come down to the lower blue line as a test which subsequently fails; the move continues lower.
Either way, normal behavior at this juncture, is to move lower. We’ll see.
Now on to the chief cook and bottle washer … Tesla.
Tesla (TSLA), At The Edge
For starters, let’s recognize there’re a lot of moving parts; U.S. ‘parts’ and China ‘parts’.
If one’s going short, another task is to forecast under what conditions a short would have enough risk removed.
For that answer, oddly enough, we go to gold, GLD.
Gold GLD, Weekly: 2015 – 2017
GLD posted a massive upthrust above the blue line lasting over fourteen weeks before breaking decisively lower.
Then, it labored four weeks to come back up for a test.
After that, collapse; lower weekly closes for seven consecutive weeks.
In the chart above, the area identified as ‘Short’, has as much upside risk removed as possible, right at resistance.
Now on to Tesla.
Tesla TLSA, Weekly
Two scenarios are presented where risk may be reduced.
Chart 1
Chart 2
One of these may happen or neither of them.
Either way, for risk to be reduced, a short entry is needed to be at a known resistance level (not advice, not a recommendation).
Let’s move on to the current positioning.
Positions: (courtesy only, not advice).
One of three events will happen at the next session.
1: Both positions stopped out
2: One position stopped out
3: No positions stopped out
Each outcome will provide a data-point where to focus (or not) in the current environment.
LABD-22-10:
Entry @ 18.1398: Stop @ 16.83
JDST-22-05
Entry @ 9.1666: Stop @ 8.79
Note: Positions may be increased, decreased, entered, or exited at any time.
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 market itself is telling us it’s not going to be ‘well behaved’, possibly for years to come.
According to Goldman, link here, we’ve just had the largest short squeeze on record.
Friday, must have pushed it over the edge from the previously reported, ‘third largest‘.
The ‘Pontificators’
Everybody think’s they’ve got it figured out; We’re going to have stagflation, no wait, hyperinflation, no wait, inflation/deflation simultaneously, no wait, dollar collapse, no wait, gold to the moon, no wait, and on it goes.
What we really have, which is obvious to those ‘awake‘, is something that’s never happened before.
That ‘something‘ is here every day, multiple times a day.
Flash Crash, 2010
Every so often just as a reminder, this event is posted as an example; until that day, it never happened before either.
“Paper comes in, a big seller!!!”
‘Paper’ is essentially anyone (banks, hedge-funds, institutions, and/or retail) outside the pit. Those in the pit are called ‘locals’.
Positioned At The Extreme
The largest short squeeze in history has actually performed a public service; the markets are at extremes.
With that, the short position in Junior Miners GDXJ, has already been discussed, link here.
We’re going to move on and talk about the elephant; more specifically, biotech SPBIO.
Biotech SPBIO
The table shows last week’s action when compared to the week prior. All major sectors had solid gains but it’s the right-most column that’s of interest.
The right-side column shows how far price action closed above the prior week’s high.
Once again, biotech shows overall weakness. It gets more interesting when looking at the weekly chart.
Biotech SPBIO, Weekly
It’s been three successive weeks of apparent up-thrust reversals that were negated each time.
Looking at the weekly below, what we have, is a huge bear flag that just so happens to be, Fibonacci 8-Weeks wide.
It’s possible, this congestion area is the mid-point of the overall move from the highs set during the week of February, 2021.
Compressing the chart and putting in a measured move target gives us the following.
If we have an actual Head & Shoulders top, that target is shown as well.
Either way, the downside potential is enormous; thus, requiring intense focus from a Wyckoff standpoint, i.e., during a bear market, identify the weakest sector for short opportunities (not advice, not a recommendation).
All of which brings us to positioning.
Positioning
On Friday, a discretionary exit was made from the entire LABD-22-09 position as (LABD) price action continued to decline with no end in sight.
Loss on the LABD-22-09, series was a drubbing of -12.2%
Then again, last week was the largest squeeze in history; taking that into account, the loss wasn’t -30% or -50%.
As the trading day progressed, LABD price action continued lower until low-and-behold, it reversed.
Once again, a position was entered (not advice, not a recommendation) but this time was different. Frist off, initial position size is smaller; about 60% smaller.
Secondly, the stop is an actual order that’s in the market (shown below).
Sounds obvious but we’re dealing with unprecedented times and market disruptions. Recall during the Flash-Crash of 2010, Kimberly Clark, or Colgate (if memory serves) went ‘no-bid’ and printed i.e., sold for 0.01.
That low print remained on the charts for years until it was ultimately removed.
If it can happen on the downside (i.e. when long), it can happen on the upside as well (when short).
Positions: (courtesy only, not advice).
LABD-22-10***:
Entry @ 18.1398***: Stop @ 16.83***
JDST-22-05***
Entry @ 9.1666***: Stop @ 8.79***
Note: Positions may be increased, decreased, entered, or exited at any time.
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 day after the third largest short squeeze in market history, we have marginal new daily highs.
Gold was one of the markets that made news this week with it ‘leaving the station’. 🙂
Let’s take a look at gold (GLD) and how I used its message to position short (not advice, not a recommendation).
Gold (GLD) Daily
First, we’re going to re-print the original analysis below from November 4th.
And now, the result
We’re right at the edge. Any higher and it could be bona fide breakout.
The miners rallied in kind.
Senior Miners, GDX, is in an up-thrust of its own (not shown) along with the Juniors GDXJ; being a weaker sector it’s extended but not able to push as high as GDX.
Junior Miners GDXJ, Daily
Note the black line and arrow.
Seniors, GDX, was able to penetrate this area on its own chart but GDXJ, has not (so far).
This gives us an extra layer of resistance for a short position (not advice, not a recommendation).
We can add to that as noted, it was the third largest squeeze in history and today was slightly higher … so what else is there? Risk has (nearly) been squeezed out.
About an hour after the open, a short was opened using GDXJ leveraged inverse fund JDST; JDST-22-05.
Position details and stop locations are to be provided in the next update.
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.
That first link even shows how far GLD, is likely to go, which at this point, is just ticks away.
Gold GLD, Daily
We’ll start first with the original forecast.
And the result (as of 1:20 p.m., EST).
We can see price action nearing the up-thrust (reversal) location.
Note: Penetration to the upside above resistance, does not necessarily mean it’s a short opportunity.
Any opportunity will be determined by price action itself.
Summary
Wyckoff analysis not only can provide potentials for price movement; when that move happens, it can also be a stabilizing factor so that one is not caught up in the usual media hysteria.
Meanwhile, back at the ranch, biotech sector (SPBIO) is still on track (ever so slowly) for a potential sustained move to the downside (not advice, not a recommendation).
Positions, Market Stance (courtesy only, not advice).
LABD-22-09:
Special Note:
This sector and leveraged inverse LABD are highly volatile. Character of the market can change at any time.
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’re a lot of moving parts to biotech and it’s like a game of chicken.
Is there going to be another ‘planned’ event pulled out of the bag that requires ‘protection’ or will this side (and this one) win-out before that happens?
Price action’s always the final arbiter and right now, it’s positing lower.
Gold:
Gold (GLD) ‘blipped’ higher on Friday and the usual suspects are out touting the hyperinflation narrative.
Owning (some) precious metals seems to be a good thing.
However, the public constantly knee-jerks into this sector and is absolutely rabid in their behavior (i.e., silver stockpiles are running out!!!).
It suggests at least, there’s something else afoot.
Prechter published in the early 2000’s, Central Banks, are followers, not leaders. The fact they are buying gold at this point, may be a contrary indicator.
Talk about going against the herd. 🙂
Over and again, it’s the boring (does not generate ‘clicks’) food supply first, then gold and silver (not advice, not a recommendation).
Real Estate:
What can be said?
It’s the largest manufactured bubble in world history and it has already popped.
Thinking it’s all going to sort itself out in a year or two is delusional. We’ve probably got decades of bear market.
Tesla:
Anyone with an anode of research capability, knows the whole EV premise, is based on a falsehood.
However, that fact is probably not what’s going to bring Tesla (and the rest of the market) down.
Let’s stop for a moment and consider the above link which has been available for nearly four-years.
How many views? Just 9,824 (as of this post)
That equates to only 0.003% of the U.S. population.
As the global supply chains implode, getting parts and having stable infrastructure (i.e., electricity) will probably be the defining factor.
Now, on to the charts.
Biotech SPBIO, Daily Close
The following sessions will let us know if we’re at the right edge of the downtrend line.
We’ve already had an up-thrust reversal and a test of that reversal. last Friday was lower … probabilities point down.
Gold GLD, Daily
Looking at the chart on the strategic, longer term, Friday’s blip is hardly noticeable. We’ve already presented how this could be a minor up-thrust (reversal) in itself.
To keep the upside intact, price action must remain and continue above current levels.
Real Estate IYR, Daily
Real estate may be working its way into an up-thrust condition. As shown, Fibonacci Day 21 from the October 13th, low is this coming Thursday, the 10th.
According to the Economic Calendar there are several potential catalysts that may push the price above resistance (temporarily).
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 still in the early session and gold GLD, is trading higher … for now.
This morning, once GLD started to post on the tape, a new potential up-thrust (reversal) target became apparent.
The reason to think GLD, upside may be short-lived, just after the open, biotech began declining in earnest … signaling potential overall weakness for the rest of the market(s).
No one wants to talk about this sector and what’s really going on.
We don’t know when it’s all going to let loose but the pressures are immense and they continue to build.
Back to gold.
The daily chart of GLD, is below with the area in question, highlighted.
Gold GLD, Daily
Price action must get above and stay above the resistance area. Otherwise, it’s an up-thrust (reversal).
Other Markets & Biotech
Meanwhile, the biotech sector (SPBIO), is the first to post new daily lows. At this juncture, all other major indicies are higher.
Once again, as shown below, the short position via LABD, has been increased (not advice, not a recommendation).
Positions, Market Stance (courtesy only, not advice).
LABD-22-09:
Special Note:
This sector and leveraged inverse LABD are highly volatile. Character of the market can change at any time. LABD may be exited without 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.
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.
Instead of upside follow-through, we had downside test and reversal.
Gold:
GLD, closes lower and is now down seven consecutive months … a record for the tracking ETF.
Biotech
Index SPBIO, has been attempting to move higher, with it posting into an up-thrust last week.
Today it couldn’t hold the upside; now looking like a nascent reversal.
Note: Position changes at the bottom of this update.
The test and reversal in bonds (TLT) is obvious and there’s no open position in GLD.
So, we’ll focus on biotech.
Biotech ($SPSIBI, SPBIO) Daily
The zoom area of the chart shows price action just can’t seem to get above resistance (blue line).
Successive attempts were made throughout today’s session to go higher, but it didn’t happen.
Getting in closer on the hourly chart, we see the apparent upside failure during the last hour of trading.
Biotech SPBIO, Hourly
There is no doubt where at The Danger Point®
Right about mid-session, a short position was opened via LABD (not advice, not a recommendation) as LABD-22-09.
Summary
Today’s expectation for bonds was a follow-through to the upside … it didn’t happen.
In response, the initial TMF-22-01, position was closed with the secondary remaining open (not advice, not a recommendation).
Meanwhile, biotech SPBIO, was having its own problems; that is, being in up-thrust condition and not being able to make a new daily high. i.e., The Danger Point®
Positions, Market Stance (courtesy only, not advice).
TMF-22-01:
Entry @ 6.705, 7.166, Stop @ 6.68
Partial Exit @ 7.053***
***, Indicates change
LABD-22-09***
Entry @ 19.88***, Stop @ 18.94***
Note: Positions may be increased, decreased, entered, or exited at any time.
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® 