The 2021 Top

Empirical data shows market tops tend to occur before, during, or just after a holiday week.

Probably the most famous market top, was September 3rd, 1929.

That top was the Tuesday following the Labor Day weekend.

Now, we have another potential Tuesday top; February 16th. The Tuesday following the President’s Day Weekend.

While shiny object distractions abound; Game Stop (GME) hearings, Silver (SLV) squeeze, Bond (TLT) rout and more, the market may have quietly and without fanfare, put in the highs for the year.

Judging from the internet and YouTube chatter, everyone’s expecting some type of immediate crash.

Well, since everyone’s expecting it, it’s not likely to happen. Or more accurately, not the way anyone expects.

The last meltdown about a year ago was pretty much a straight-down affair. If we’ve seen the highs, what happened last time won’t happen this time.

That leaves at least two options:

  1. Gap down 15% – 30% or more, overnight.
  2. Slow, grinding decline, hardly noticeable until one day …

The chart of SPY below shows a possible Head & Shoulders, top formation. It’s still very early in the chart as even the head of the pattern’s not yet complete.

Nonetheless, it’s important to be ahead of the game and anticipate the next moves of the market.

Note the volume’s tapering off as we get into a possible head formation. If there’s to be a Right Shoulder, a textbook case will have volume fall away even more.

It’s about a half-hour to go before the open. SPY is trading down -0.65% to -0.80%, while TLT is unchanged.

If TLT makes a new daily high above 144.32, it’s a good sign we may have seen the bottom of that market.

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.

Silver on an Island

The silver hype couldn’t even last for a single day.

Price opened gap-higher on Monday and then steadily eroded to close lower; posting a reversal bar on massive volume.

The next day, yesterday, the trap is shut. Island gap reversal.

Way back in Livermore’s time, in his (fictionalized) biography, he says the big players can’t get in and out whenever they want.

Their positions are so large, entering and exiting would cause huge moves in the market. They need to have an “event” with massive volume so as to hide their actions (entering or exiting).

The pre-market update on Monday proposed the whole kabuki theater with GME, then SLV could have just been a ruse for big players to establish massive SLV (or futures) short positions; or just plain exit out entirely.

That idea doesn’t sound so far fetched now.

We’ll have to see if it’s true at the next commitment of trader’s report.

Either way, it’s not really important to dive into the minutiae. We can just look at the chart.

As Prechter likes to call it, massive volume signifies a “changing of hands”. Most likely from strong to weak (i.e. from professional to retail).

The significance probably invisible to the public, this may be the inflection point.

Now that SLV’s at a potential long term pivot, we could be at the cusp of a deflation impulse.

Commodities (like oil) along with real estate, one of the most illiquid of all markets, get crushed in a downturn.

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.

CORN: Breakout Ready

Price action in futures tracking fund CORN, is congesting in a tight range; ready for breakout to the upside.

This is not about inflation.

Frequent visitors to this site already know the entire food supply chain, from field to market, is being systematically destroyed.

Probably the best source of documentation is at ice age farmer.

For years, ‘ice age’ has been reporting step by step plans and events in place to choke-off food production and distribution.

Digressing for just a bit: The firm managing this site, presenting its analysis of markets and corollary events, is constantly searching for additional information or new data sources.

If a new market analysis (or other news) source is located, then that ‘source’ says there’s food price inflation because of dollar devaluation, it’s eliminated as being reliable or aware of actual events: DONE.

At this point, everyone should know exactly why food prices are rising.

Whenever we get the next ‘Black Swan’ event, there’ll be no time to vet out information sources. That should’ve been done long before there’s another market or world upset.

The recent Game Stop (GME) event may just be a blip; a side detour in the overall plan.

Van Metre calls the whole short squeeze “brilliant”. So it was.

We can rest assured, that hole in the dike (a proletariat uprising) will be plugged ‘tout de suite’.

Food is the key. It’s the choke point. End of digression.

Getting back to CORN. Price action may congest more before a sustained breakout. There may even be a head-fake to the downside to flush out any weak longs.

From an investment or trading standpoint, price is at the point where political events could cause action to become unreliable … think Jimmy Carter and the grain embargo after the Russians (Soviets at that time) invaded Afghanistan.

It’s the trader’s discretion whether or not to position long.

My firm’s action is to be aware of price and use it as a proxy for up-coming events.

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.