Category Archives: Interest Rates

The Concept of ‘Test’

March 20, 2024 By in $SPSIBI, Biotech, Federal Reserve, Interest Rates, LABD, Monty Python, SPBIO, XBI 1 Comment

… Or, Natural Market Behavior

The financial press will always come up with some kind of ‘reason’ why the markets went up or down.

However, getting to the truth of price action is sometimes boring and also requires a focused amount of thinking.

That thinking requirement, puts it ‘right out‘ (as the Brits would say) for any kind of media consideration. 🙂

Therein lies the opportunity; case in point, biotech, XBI.

The sector did not move higher today as a result of any type of ‘good news’ for potential rate cuts; cuts that so far have yet to materialize (waiting now, for over a year).

No, XBI went higher today to ‘test’ the underside of resistance after its own break through that resistance.

Biotech XBI, 3-Day

As stated in the prior update, it’s going to take some kind of extra demand to get the sector back to bullish.

For now, it’s right below resistance and testing.

Obviously, what happens tomorrow, is important.

If we’re in a test, and not a new leg higher, the expectation is for very limited upside price action … if any.

Stay Tuned

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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.

The Danger Point®, trade mark: No. 6,505,279

Odds Stacked Against Biotech

March 19, 2024 By in $SPSIBI, Biotech, Federal Reserve, Interest Rates, LABD, SPBIO, XBI 4 Comments

Below Resistance & Trendline Break

Tomorrow’s the Fed interest rate announcement; anything can happen.

The way it stands now for biotech XBI (the day prior), an upside rally is against the odds.

The chart below for the sector is a busy one.

Biotech XBI, 3-Day

Price action’s below resistance (possible false breakout), has broken an upside trend to the downside (grey dashed line) and today, has come back for a test of both.

Breaking below resistance was accompanied by increased volume; bearish.

A significant amount of demand will need to show, to get this market back to the bullish side (not advice, not a recommendation).

The Fed interest rate announcement is scheduled for Wednesday, 2:00 p.m., EST.

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.

The Danger Point®, trade mark: No. 6,505,279

The Fed’s Next Move … Rates Up

February 19, 2024 By in Bonds, Federal Reserve, Interest Rates, NVDA, TLT, Uneducated Economist, ZeroHedge

What A Surprise!

The Fed’s next move may be to raise rates, not lower them.

For those following this site, there’s no surprise. Over a year ago, we had this:

“Like ‘bread and circuses’, the ‘pivot’ discussion is a distraction … “

Incorporating the potential of rates higher into one’s analysis, ‘internalizing’ it as Uneducated Economist says, positions one completely out of the herd, able to view events objectively.

All of which brings us to the bond market, specifically long bonds TLT.

Long Bonds ETF, TLT Daily Close

Updates from this site are noted.

Until price action shows otherwise, rates are likely to head higher, not lower (bond prices down).

Therefore, using that strategic premise, the upside breakout (above resistance) in bonds had a higher probability of downside reversal than upside continuation.

No. 1 : The Usual Suspects

In the update with the above name, link here, scroll down to bullet item No. 10 for analysis.

The potential for a false breakout was correctly identified,

No. 2: Bond Reversal ? … Ruh, Roh

First, there’s potential, then, the actual.

The next update, link here, presented among other things, the odd occurrence of both bond and overall markets moving down simultaneously.

The inference being, the 40-year bond bull market is over and higher rates are more likely (not advice, not a recommendation).

Then, The Fed and Nvidia

The next few days may be quite interesting.

Nvidia (NVDA) earnings are due after hours on Wednesday and the Fed minutes are scheduled for release earlier (2:00 p.m., EST) the same day.

Stay Tuned

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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.

The Danger Point®, trade mark: No. 6,505,279

D.R. Horton ‘Rolls Over’

February 17, 2024 By in DHI, GDX, GDXJ, GLD, Gold & Silver, Gold Miners, Interest Rates, NVDA, QQQ, Real Estate, SLV, SOXX, SPY, TLT, ZeroHedge

When Real Estate Goes …

It’s been said, ‘when real estate goes, everything goes’.

Like a slow-motion train wreck, since late January, this site’s been watching the (potential) topping activity of D.R. Horton, DHI.

Now, DHI is reversing; coincident with the housing starts collapse, link here.

D.R. Horton, DHI Weekly Close

We’re right at the top of the ‘terminating wedge’.

Downside penetration and test will provide confirmation of the reversal (not advice, not a recommendation).

The major market indices appear to be topping out as well.

The SOXX, may have reversed. Trading was ‘outside-down’ during yesterday’s session.

The SPY, and QQQ, also posted outside-down.

The potential Nvidia, NVDA reversal (link here) shows that so far, that high has not been exceeded.

Rates Up, Not Down

Adding gasoline to the fire, part of this site’s strategy is rates are going higher, not lower (not advice, not a recommendation).

So far, we see that’s true with long bonds (TLT) reversing to the downside, yet again.

And Then … Gold

Let’s not leave out the latest bullish report on gold (and silver), link here.

Notice the bias … that silver’s cheap relative to gold.

How about the massive, multi-year, ‘non-confirmation‘ between gold and the other monetary metals.

If it was real 1980s style inflation, everything would be moving up in tandem … which it is not; something else is going on.

Is the mining sector, GDX, GDXJ, anticipating a price decline in gold?

Stay Tuned

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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.

The Danger Point®, trade mark: No. 6,505,279

Potential Short: D.R. Horton

January 27, 2024 By in DHI, Federal Reserve, Interest Rates, Real Estate, ZeroHedge 3 Comments

Watch For Retrace

We’ve all heard, it’s 80% planning and 20% trading.

So it is, with D.R. Horton (DHI).

As a reminder, this site addresses strategic positioning first, then tactics, and then focus. See the About section for more.

Strategy Review

Unless the charts say otherwise, rates are going higher, not lower. Gold and silver will likely go lower first, before going higher, supply destruction and resulting price increases will continue (not advice, not a recommendation).

D.R. Horton: Possible Retrace

One of two scenarios are likely. 

DHI could continue its decline, straightaway. Monday’s open could be gap-down, posting down, no looking back.

The next scenario, a retrace to test underside of resistance. As the chart below shows, that underside is right at 38.2%.

DHI, Daily

The chart presents ‘potential’ only. If the market is well behaved, a retrace to test is a reasonable expectation.

If there’s a retrace, Fibonacci Day 8, from the 1/22/24, high is this coming Wednesday, the 31st.

That day just so happens to correlate with the Fed interest rate announcement due out at 2:00 p.m., EST.

Stay Tuned

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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.

Rates Rising … Miners Critical

January 25, 2024 By in DHI, DUST, GDX, GDXJ, Interest Rates, JDST, Spring-to-Up-Thrust, Wyckoff, ZeroHedge 1 Comment

Then, The Real Estate Bubble

The elephant in the room:

Rates are not going lower, they’re going higher; sooner rather than later (not advice, not a recommendation).

Yesterday, ZeroHedge reported the 5-yr auction was nasty with rates rising to near recent highs.

Today, we have yet another supply disruption impacting so-called ‘inflation’.

Couple that with an apparent real estate implosion.

DH Horton (DHI) down nearly – 12% in just days and holding steady in the pre-market session.

It looks like the bubble party is (finally) over.

Gold Miners To Catch Bid?

The miners are at another critical juncture.

The Juniors GDXJ, are up in the pre-market session (8:00 a.m., EST) and may be catching a flight-to-safety bid as parts of the markets top out and/or reverse.

That flight to safety may not last long as we’ll see below.

Junior Miners GDXJ, Daily

Trading is up about 1% or 0.32 pts in the pre-market.

GDXJ, price action is at The Danger Point®. 

We are either in a reversal (Wyckoff spring) set-up or just a pause before posting lower.

If it’s a rally, the target area is shown (magenta oval); corresponding to a 61.8% retrace.

Stay Tuned

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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.

Interest Rate Shakedown

January 16, 2024 By in Bonds, Federal Reserve, Interest Rates, TLT, ZeroHedge 2 Comments

The ‘Uh Oh’ Moment

Now it begins, sowing the seeds of doubt.

‘First rate cut may be later than expected.’

How about be prepared for no rate cuts this year and more likely, continued elevated rates or higher rates (not advice, not a recommendation).

Let’s not forget we’re over a year now from the release of this post, postulating there would be no ‘Fed pivot’.

So far, no pivot and no cut.

Now that nearly everyone’s positioned on the ‘rate cut’ side, it’s time for the shakedown, possibly beginning today.

Long Bonds TLT, Daily

Just over two-weeks ago, this post noted to be on the watch for a failed breakout.

Looking at the result, we’re now below the prior breakout resistance, a bearish sign.

The chart of bonds itself is telling us (unless it’s reversed to the upside), there’s an increased chance rates are more likely to move higher (not advice, not a recommendation).

Note the ‘persistence’ to the downside of the MACD indicator. This tends to happen when sustained pressure is being applied … selling pressure in this case.

Stay Tuned

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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.

‘$30-Silver’ … Nowhere In Sight

December 30, 2023 By in Car Questions Answered, Federal Reserve, Gold & Silver, Gold Miners, Interest Rates, SLV, Wyckoff

It May Still Get There … But First

Just as this report said nearly a year ago, there’d be no Fed pivot (still waiting), this article from seven months ago, prompted a mental note to revisit the ‘$30/oz’, silver prediction.

Before we address that, let’s go way back to this post over three-years ago, detailing how the miners, and silver for that matter, are not (yet) in a sustained bull market.

Now, we have the Fed ‘pivot’ set-up and the metals (especially silver) posting a non-confirmation.

The (non) ‘Pivot’

Obvious to only a few (like Uneducated Economist), is how the ‘pivot’ narrative is a false. 

Typing in ‘Fed pivot’, into YouTube turns up a massive list. Everybody’s jumping on board. 

That in itself, may be cause for alarm.

From a strategic standpoint, we’re not in Kansas anymore.

The 40-year long bond bull market (1980 – 2020) has been broken. Higher rates for longer, like maybe another forty-years, may be the norm (not advice, not a recommendation).

Silver Still Down

Silver (SLV) is far below its 2011, highs: approximately -55%. In addition, SLV, may be on its way to test the lows of SLV, 12.50 – 13.50. More on that in another post.

Silver SLV, Daily

The chart shows we’ve had a false breakout (Wyckoff up-thrust), then reversal, and now an apparent test that has (so far) pivoted lower.

The inference is, the silver market’s not buying the Fed ‘pivot’ and subsequent inflation narrative. 

It’s possible, the economic collapse narrative like here and here, is weighing more on silver … a narrative that’s actually happening. 🙂

Stay Tuned

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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.

The Danger Point®, trade mark: No. 6,505,279

There is no ‘Spoon’

September 13, 2022 By in $SPSIBI, Biotech, Interest Rates, LABD, LABD-22-05, Livermore, Positions, SPBIO, TDA-LABD-22-02, Wyckoff

Paradigm Shifts

We’re living in the surreal.

Only those who can ‘see’, understand it’s like something out of The Matrix.

The old paradigms no longer apply.

There is no ‘Pivot’

There never was a ‘pivot’; just like there never was a goal of 2% inflation, or full employment.

Way back in 1921, Jesse Livermore pegged it when he told Wyckoff, the whole premise of Wall Street, was to spread “deception”.

Deception is the key.

Attempting to figure out the next earnings release, the CPI or employment numbers, inflation, or what the Fed is likely to do, is to buy into the deception.

Following that deception, is the path of the amateur.

Meanwhile, back on the professional side; as early as 1909, Wyckoff discovered market prices move based on an energy and objective or their own … completely removed from any fundamentals.

A few days ago, this update, discussed how biotech SPBIO, was potentially at a pivot point and ready to reverse lower.

Well, downside reversal is what we have.

Biotech SPBIO, Weekly Close

Even though we still have three trading days left, SPBIO, appears to be confirming the right-side trading channel.

Last Week.

And … this week

With the overall markets down sharply, events appear to be set in motion to continue downside action.

Summary:

As stated in prior updates, the current trade; LABD-22-05, was initiated in anticipation of a significant break lower (not advice, not a recommendation).

On the biotech fundamentals side (not that it matters), the wheels have come off.

The top weighted equities have no P/E … a decent conclusion may be the lower weightings don’t either.

Nobody’s making any money; rates are rising and we’re heading straight into an economic depression.

Stay Tuned

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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.

The Danger Point®, trade mark: No. 6,505,279

Bonds Down … Real Estate, Next ?

April 13, 2022 By in Bonds, David Weis, DRV, DRV-22-01, Interest Rates, IYR, Real Estate, SRS, TLT, ZeroHedge 1 Comment

Visions of 2008 ?

The Head & Shoulders pattern on the weekly chart of IYR, could mean reversal ahead.

Price action’s been attempting to move higher over the past twelve trading days.

‘Attempting’, because it’s not making any significant net progress.

Essentially, we’ve got what’s called ‘evidence of a struggle’ where the bulls may be exhausting themselves.

The last update on bonds (TLT), said they’re at the danger point where an upside reversal was possible.

That update also said:

“At this juncture, there’s either a reversal and much higher levels or down, with rates higher; in turn, leading to the subsequent collapse of real-estate, a-la 2007 – 2008.“

Since then, bonds are lower, rates higher. Housing affordability has collapsed.

Real Estate, IYR, Weekly

At this point it’s a clear H&S, pattern.

The daily chart shows IYR, oscillating around an axis, support/resistance line; struggling to move higher (in up-thrust condition) with no real progress.

As with bonds in the April 3rd, update, we’re at the danger point with IYR.

A decisive move below the axis (blue) line would indicate the bulls may be exhausted.

Because price action’s been in this range for over two weeks, lends support to the possibility any breakdown (or breakout higher), may be a sustained, directional move.

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.

The Danger Point®, trade mark: No. 6,505,279