8:49 a.m., EST
GLD, retraced 50%, now at edge of range.
Reversal is possible
Note: Both charts are inverted, turned upside down.
Above: GLD is currently at 50%, a common retrace level.
Next: We have GLD, in a possible trading channel.
With the Fed meeting minutes due out at 2:00 p.m., EST, that release could be used as the excuse for GLD, to complete its corrective action.
If GLD pivots lower, the dollar (UUP), could also make its move and reverse higher.
Stay Tuned
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11:32 a.m., EST:
Just like ‘peak oil’ back in the summer of 2008, now it looks like we’ve reached ‘peak narrative’ for inflation.
‘Narrative’, because the markets are a game of manipulation.
If you don’t know who’s being manipulated, then that person is you (slightly changing a Buffett quote).
Bolstering the assessment, is this report from ZeroHedge.
Looks like everybody’s on board and reporting higher prices. Just like they were on board last year with: “We’re all in this together”.
The exact same tag-line for every major U.S. corporation … with ready made (like they knew ahead of time) banners to boot.
The problem is, the markets are not following along.
Reported two days ago, senior gold miners are testing their reversal.
Yesterday, was an upward push that wound up being an ‘out-side-down’ bar (GLD, GDXJ, SLV) … a reversal in itself.
That’s not in the script. Or, is it?
At this point, the public’s literally redirected, manipulated, at will. It’s a sick game being played by all who control the media.
From a personal standpoint, I’d rather make some popcorn, take my red wagon full of fiat, go camp down around $800/oz., and wait.
The gold ice cream man may never show up. If he does, great.
If not, there’re other opportunities; at least I’ll not be one of the manipulated masses screaming inflation hyperbole if/as/when gold ratchets all the way down.
Stay Tuned
With the kids at the card-table, freaking about ‘plunge protection team‘, rigged markets and Bitcoin, grownups the next table over, are planning their moves.
Friday’s late session rebound higher was not uncommon for a typical short squeeze.
These gyrations are intended to make sure only a select few are aboard when we get the break.
This idea is not new. You’ll find statements to that effect over and over in most any trading book.
The big difference now, is the amazing level of complacency and learned helplessness of the overall population.
Just one example of such before we move on to the charts.
Texas has opened up. Schools are about to go without diapers. Perish the thought.
Yet, there’s still a contingent that’s near hysteria about ‘safety’.
With all the information available, yes one actually has to do real research to find out what’s going on, huge segments of the population adamantly remain (intentionally) ignorant.
Unfortunately, that segment has voluntarily (at least in the U.S.) lined themselves up to be taken out; financially as well as physically.
Just a few of the most recent links, here, here, and here.
At some point, those links are going to become common knowledge.
Hopefully, there will be long lasting and certain retribution for the perpetrators. However, for those who ‘volunteered’, it’s already too late.
Now, on to the markets.
Friday’s real estate rebound (IYR) looked like short-squeeze action.
In response to that and late in the session, short position DRV (3X inverse IYR) was increased at price 9.37 (not advice, not a recommendation).
Volatility is still low in IYR. Short positions can be increased with less risk.
The Big Break
When and if the break comes, it’s likely to be fast; no time to plan.
Whatever plans one has should’ve been laid out well ahead of time.
Two markets being watching closely are Peabody Energy (BTU) and Seabridge Gold (SA).
By now everyone’s aware that a certain far east country is going about its business and building their infrastructure … as if nothing had ever happened. Funny that.
Conversely, the coal market has bottomed out and so has Peabody.
On top of that, the Texas Freeze laid bare the farce that is climate change, global warming and green energy.
Quietly, without fanfare, coal is seeing increased demand.
The blue arrow is a gap in trading that could be filled.
To do that, there might have to be a massive market collapse, pushing BTU back to that level … if only temporarily.
Huge volume in the past six months shows that somebody’s buying.
The next market is Seabridge Gold (SA) which is being watched for essentially the same reasons. If Van Metre is right and we’re in a deflationary impulse, the entire public’s on the wrong side of the trade.
If SA can get itself below 13 – 14, it then enters free-fall territory.
If that happens, as with BTU, it too might be a short lived event.
Positioning:
Currently, the firm’s position (not advice, not a recommendation) is short biotech and real estate via LABD and DRV, respectively.
If BTU and SA get to extreme lows, both of them have potential for a ‘ten-bagger’, the possibility to gain over 1,000%.
Getting to such gains would necessitate a change in the current strategy of trading, to buy and hold.
Summary:
Pressure seems to be building for some unexpected event that would cause a market break; Possibly the devaluation of the Yuan as discussed by Steven Van Metre.
If that’s going to happen it’s likely to be soon.
Stay Tuned
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Its been nearly twelve years exactly since the market bottom of March 9th, 2009.
At that time gold tracking fund GLD, was trading around 90.
Today, it’s at 167, a gain of about 85%.
Gold futures for April ’21, closed this past Friday at 1,777.4
Either way, it’s a far cry from the $10,000/oz. that has been bandied about for what seems like forever.
Prices for energy and food are rising because of reasons not discussed in the financial media.
That media is certainly not going to educate the public.
In turn, that public has shown there’re certainly not going to educate themselves. If they were awake, news channel ratings (in the link) would be at zero.
Unfortunately, this time around, the game’s up.
The ongoing collapse will decimate those who refuse to wake up and will probably take some of those who are, with them.
Which brings us to the so called inflation, at hand.
What can be said? We can call it lies, misinformation, propaganda but none of those really get to the root.
Input prices are rising not from inflation, but from supply constriction and disruption.
For example, the corporate (big-Ag) food supply chain as reported on many times, is intentionally being destroyed. The result of course, prices go higher.
We’re also in a quiet sun-cycle period that only serves to help with (cold) weather extremes. The only discussion from the media concerning the weather is that’s it’s getting warmer, right? Opposite of reality.
So we’re taking that ‘opposite of reality’ as a contrary indicator.
Whatever inflation we’ve got after nearly twelve years, is probably at or near a peak … ready to head lower.
That includes the market as well. The likely outcome:
Market down, bonds up.
The daily close of long bond TLT, has it in a support zone. One attempt has already been made to position long via TMF (not advice, not a recommendation) as detailed in this report.
Once again this past Friday, another TMF entry.
Both bonds and the markets (i.e. S&P 500) are at opposite extremes. The risk of loss in bonds may have reached its nadir.
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With GDX posting a new weekly low (below 33.23) early this session, it’s helping to confirm a pivot and acceleration to the downside.
Bullish or bearish, it’s a crowded trade that we’re avoiding (not advice, not a recommendation).
It took over a week of oscillating price action before GDX decided to post below the February 4th, low.
Even so, when an established low is penetrated, it puts the market in “Wyckoff Spring Position’.
That means there’ll (potentially) be some type of rally or rally attempt. If that happens, it’s just more oscillations that result in erosion of leveraged inverse funds.
Other areas of the market are performing better on the downside. Real estate IYR, looks like it may post a narrow range day (as of mid-session).
It’s typical action when at support. If there’s no break lower today, then IYR could make an attempt higher at the next session.
Based on previous analysis, that attempt (if it occurs) is expected to be short lived.
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The short answer is, probably not.
Is anyone looking at the technical condition? No, it’s all about ‘putting it to the man’.
In all of Wyckoff’s writings, he never once proposed the idea of taking the large controlling entities for a ride.
He was totally immersed in figuring out what those entities were trying to accomplish; then getting on the right side of the trade.
For all we know, the whole hedge fund blow-up, kabuki theater could have just been a sacrificial lamb (an inside job) targeting silver for a massive short opportunity.
How’s that for strategic thinking.
Right now, in the pre-market, SLV is right at new recovery highs.
The real question should be, ‘how long can the hype last?’
Can it finish the week at new highs and post a bearish divergence on the weekly MACD?
Price action itself will decide. What we do have, is risk being removed on the short side.
Inverse fund ZSL is down a stiff -21%. If there is a short, that’s the one to watch (not advice, not a recommendation).
It’s important to note, GLD is nowhere near a +10% move. It’s a non-confirmation on silver.
Separately, the overall markets are trading higher but appear to be under their prior session (daily) highs … indicating a short position in those markets is still viable.
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Semiconductor SOXX, is hanging by a thread.
Did SOXX just break away during the past week or is there going to be an attempt to close the gap?
When a market closes down for the week and near its lows, there’s usually follow-through action at the next open.
SOXX may never get the chance to fill the gap.
If we look at inverse fund SOXS, it’s showing a potential trend-line. Maintaining that line will double the price (at Friday’s close) sometime in early March.
The chart below also shows the firm’s entry point; not advice, not a recommendation.
In a way, semiconductors are similar to aviation; margins are razor thin.
When there’s an economic down-turn, both get hit especially hard.
At this juncture, I have positioned my firm short in both real estate (via DRV) as well as short the semi-industry (via SOXS). Not advice, not a recommendation.
The SOXS position finished in the green by the close. DRV is showing a loss but closing that gap quickly.
Separately, and in a report planned for tomorrow, we’ll cover the food supply. The ongoing (planned) shortage is proving correct, the approach it’s ‘corn first, then silver and gold’.
If Van Metre’s GDX forecast is on target (declining to 17, or even 14), gold bugs may find themselves liquidating their positions; just so they have enough money to pay for hyper-inflated food.
In effect, gold will be irrelevant; a very possible (short-term) event.
Stay Tuned
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Bear flags post in a bear market
Bull flags post in a bull market
Right?
One would think.
It’s different though, if you’re a rabid ‘not-right-in-the-head’ gold bull.
The professional does not care which direction the market is heading. The only important thing is, and to paraphrase Livermore:
‘There’s only one side of the market to be on … and that’s the right side.’
GDX has posted and tested a bear flag.
At this juncture, it’s heading lower … possibly to test between 15 – 17, as was just mentioned yesterday, by Van Metre (time stamp 10:00).
Conversely, in the general equity markets, there’s reversal action with the S&P, Dow, Russell, all lower.
On top of that, bonds are in their own reversal (up again in the pre-market) as well as the dollar.
In the Van Metre link above, in addition to comments on gold, he also sates ‘the market is not prepared for a bond (and dollar) reversal.
When markets are sure of one thing and the other happens, it’s very ugly.
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If GDX price action continues lower, it may have completed its test forecasted three-days ago.
The gold market is a very crowded trade. At this point, one to be avoided (not advice, not a recommendation).
If GDX posts a new daily low (below 35.40), it would give extra weight, the test is complete.
At the minimum, price action has recognized the bear flag by coming back up to test and then pulling away.
That alone, should give the gold bulls some pause.
In other markets, real estate IYR, did exactly as forecast. It opened below yesterday’s close and retreated from there.
The upward test, also discussed in this morning’s update may have already happened; there’s a 38% retrace present on 30-minute or shorter time-frames.
Correspondingly, the DRV position has been increased (not advice, not a recommendation). At this point we have an absolute hard stop: Yesterday’s DRV low, @ 9.67.
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Last week, Senior Miners GDX, broke out of a bear flag to the downside.
There could be a little more momentum lower before reaching support in the area of 33 – 34.
After that, expect a test to the underside of the flag. This is typical market behavior.
If that happens, we’ll have familiar gold bull hysteria ‘this is it!’ All the while, GDX and gold (GLD) grinding lower.
Recall gold (and related), is a very crowded trade. Eventually, there will be a sustained bull market … probably after all have grown weary hearing the rumor of it.
Anecdotally, remembering entries from a diary during the 1932 lows (the actual source has been lost), were to the effect:
‘Everybody knew that major stocks were a once-in-a- lifetime deal, but nobody had any money‘.
That lifetime deal, or deals may come. The objective is to survive, prosper and be ready when it gets here.
With that, there’re probably much better opportunities for a directional move to the downside.
Real estate, Oil & Gas Exploration sectors come to mind.
On the real estate side, it’s unfortunate, sad, but entirely possible a significant number of those to lose their homes through foreclosure, are somehow going to be housed in now-empty, or near empty commercial (mall) areas or office buildings.
If so, that relocation process will take a significant amount of time. The value of IYR’s components (SPG, EQR, etc.) may reach some type of bottom before it’s all straightened out.
We’re already past the beginning stages of a massive life-long depression.
Getting focused on it, is difficult but best if one is to come out the other side intact; or better yet, well positioned to re-build.
Next scheduled analysis: Real Estate, IYR
Stay Tuned
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