Before The Open

In the pre-market (8:52 a.m. EST) action continues to grind higher.  Both the Dow and S&P have posted new highs thus negating the Holiday Turns scenario … but not by much.

Important to note is each market continues to post on the underside of a long-term trend-line.  The Dow chart (DIA) is farther down this post.

Also added to the chart is the dashed trend-line underneath the recent price action.  A wedge is being formed; typically last stop before reversal.

In other markets, looks like Biotech may continue higher but along with the others, action appears labored.

The short position could be stopped out at the open. 

This area of price action is where cost of being wrong is least.  We’re at The Danger Point.

Update: 9:04 a.m. EST: Both AMGN and MRNA have now posted lower in pre-market.

Stopped out does not mean there’s no opportunity.  The bearish MACD divergence is still there.

If IBB continues higher, the original ‘150’ target is back in play.

The market extremes are still there:  Bonds and the Dollar are short the most in history.  Stretched all around.

It’s not unreasonable to expect several attempts to position short.

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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.

Was That The Top?

“If the market (S&P, Dow, NASDAQ) opens lower tomorrow, Friday and continues decisively lower, we might add Tuesday, November 24th, 2020, as another empirical data-point for Holiday Turns.”

The quote above was from last Thursday’s update.

Well, it looks like the market waited one additional day to make its turn.  For the Dow 30, last Tuesday the 24th, was indeed a high.

We’ll see how far this one goes.  It’s a high but whether or not it’s THE high is not known.

Given the market conditions being reported on this site, long positions look tenuous indeed (not advice, not a recommendation).

The ever helpful, knowledgeable financial media says ‘it’s the best month since 1987’.  No elaboration on that one is necessary.

The takeaway is, understanding that market pivots tend to occur during a holiday week … when no one is looking.

In other markets, gold (GLD) continues lower and is attempting to take the miners (GDX) down as well; currently oscillating near unchanged.

Biotech pushes into its breakout but at this juncture (11:53 a.m. EST), it looks weak and may not have energy to get to a new all time high.

It should be obvious the manipulators are hard at it … attempting to get the sector (IBB) to move high enough for gains on the long side, then turn around and establish low risk short positions.

Wyckoff noted that under such conditions (exit longs, enter shorts), daily volume will be two-to-three times greater than typical.

Chart of DIA is below … showing reversal since last Tuedsay, the 24th.

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.

Empirical Evidence

Market tops and reversals tend to occur just before, during, or just after a holiday week.

Will this market be any different?

Empirical data collected over the years (linked here) shows a tendency of the markets to reverse during holidays.

The most famous reversal was September 3rd, 1929.  That was the day after the Labor Day Weekend.

Yesterday, the Dow 30, made a new all time high. Looking at the chart (expandable version here), it’s in a very narrow range and hitting the underside of a long-term trend line.

This is a low risk area. A DXD (2X inverse fund) push past 13.22, could be considered an entry signal; stop at DXD 12.96 (not advice, not a recommendation).

There’s bound to be a lot of chop if and when this market reverses; the firm is leaving this one alone … for now.

Reversal chop was clearly seen on the GDX.  It banged around for months before getting into position for a decisive move lower.

Trading inverse funds (for best profit) requires a steady, sustained directional move. 

Those moves typically do not appear right at a reversal transition.

If this is it … if this week is the high and reversal for the S&P, Dow and NASDAQ, then it’s likely the market will chop and set up conditions before a sustained move lower.

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.