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 tends to be a period of consolidation and organized chaos, before price action enters and exhibits channel behavior.
Of course, the problem from a trading perspective, be able to wait through the chaos getting to the set-up and that’s no small feat.
Several of the major indices are in a channel right now. Those are (ETF symbol) SPY, QQQ, IYR and IWM.
We’ll discuss the Q’s farther down but first, this just out, on ZeroHedge, concerning the overall economic conditions.
That is, we’re already in full scale economic collapse and they have the data to prove it.
As incredible as it may be, there are still sectors of the population that believe, ‘the consumer is strong’.
A big wake-up call is coming for them. Oh wait, is that a telephone ringing off in the distance 🙂
The media lies appear to be crumbling at an exponential rate; there’s no guarantee it’ll all hold together into late January, or mid-February as presented only yesterday.
From a Nasdaq (QQQ), technology sector perspective, we have the following.
NASDAQ QQQ, Weekly
The Q’s began the week with a lower open and within the range of the prior week.
It’s a subtle clue the direction remains down and the market’s not volatile … just yet.
Next up, is the channel
It has the right ‘look’.
Moving in closer; the right-side trend line verification (hits).
There are no fewer than four weekly hits (including today) that verify the right side. The attempted push out of the channel is identified as the ‘Throw-Over’.
Attempted breakouts (and failures) are common market behaviors. We see that price action quickly got itself back into the channel.
Get In … Get Out
At this juncture, price action remains in the channel.
A short position (via QID, or equivalent) is a viable choice for the trader/speculator (not advice, not a recommendation).
For the reasons described above (the collapse), we appear to still be in the early stages of the down channel.
Obvious discretionary exit points for a short trade would be left side contact of the channel i.e., the ‘demand’ side or a decisive right-side breakout i.e., the ‘supply’ side (not advice, not a recommendation).
Summary
In a separate market, Netflix (NFLX), may have hit the right side of its own tend line as well.
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.
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 just a few hours before the futures open and we’re about to see if we have a (continuing) downside reversal.
Remember, last week was Fibonacci Week 34, as discussed in this update.
That week’s range was just over 3.1%.
The time before that, similar narrowness Week 21, was around 2.5%.
Perhaps, even more interesting, going back to Week 1, we have yet another narrow range of 2.9%.
We’re about to find out if that sequence of narrow ranges means something or not.
Holiday Turns
This coming week is a holiday week.
It seems appropriate at this time, to re-publish analysis done years ago and currently behind the password firewall of my firm’s main website.
Author’s Note: At the time, I was publishing a daily market summary.
Here it is, from June 27th, 2015 … so long ago.
Market Summary: 6/27/15
The Russell 2000 index has reversed. In addition, the S&P 500 volatility has declined to pre-2008 crisis levels. We now have yet another potential reversal during or just prior to (or just after) a holiday week.
This is how the Russell looked when the reversal was identified.
Author’s Note: The hyperlink above is password protected. The chart below, has been brought outside the firewall.
The following data shows the original analysis (first chart) and then, months later, how that analysis was proven out to have identified the (near) exact moment of reversal.
Continuing on with the original (6/27/15) post.
For clarity, the reversal area of the chart has been expanded below:
Other notable reversals that occurred prior to, during, or just after a holiday week:
Week of 5/23/08: S&P 500 makes a high on the Monday prior to Memorial Day: S&P then crashes over 53%.
Week of 7/3/14: Russell 2000 makes a high on the Tuesday of the July 4th week: Subsequent decline is 9%
Week of 9/5/14: Russell 2000 makes a high on the Wednesday after the Labor Day weekend: Subsequent decline is 12%
Week of 6/26/15: Russell 2000 makes a high on the Wednesday prior to the July 4th week: Subsequent decline: 27%
Going way back: The all time market high of 1929, occurred on September 3rd, of that year. That date was the Tuesday following the Labor Day Weekend. Subsequent decline was 84 – 89%
Author’s Note: Months later, we now have the result as shown below:
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.
The last update, posted late in the session, said with the upward bias provided by the sizable Op-Ex event, we can look for the weakest (or one of the weakest) sectors.
The chart below summarizes yesterday’s action:
Friday 10/21/22, Single Day Gains
Gold miners GDX, is the outlier at the top and real estate IYR, the outlier at the bottom.
Before anybody gets excited about ‘hyperinflation’, just a reminder; silver SLV’s, action has retraced to a weak 38.2% (chart not shown), as it was forecasted to do from last week’s update:
“Silver (SLV) is currently at support levels; therefore, some upward action (staying below SLV: 18.5) is normal behavior.”
Price action is the final arbiter; we’ll see what happens next.
Back to real estate.
Professional Wisdom: ‘The Crash’
We’re going to use the experience and insight provided by Scott Walters concerning the potential for real estate; that is, we’re in a world-wide event the scale of which, no one alive (and possibly, ever) has seen before.
The Economic Ninja has just seconded that opinion (time stamp 3:45) with his quote:
“Right now, we are in the greatest collapse since The Great Depression; and I believe it will be as severe, if not worse, sharper, faster, than what people experienced in 1929”.
So, what would that ‘collapse’ look like on a chart of real estate, IYR?
Ah, yes. That’s the hard part.
To take useful wisdom like that above, and somehow map it into potential market behavior.
For that, we’re going to use the Quarterly chart of IYR.
Real Estate IYR, Quarterly
There are still two months and one week left to go in the 4th, Quarter.
We’re at a confluence of price action as we’ll cover in the Hourly chart farther down; first, what’s the potential?
Here is one artist’s rendition (not advice, not a recommendation).
That puts it into perspective.
We may know at the very next open, if we’re pivoting higher or continuing the decline.
Butterfly In The Amazon
Of course, the market’s not going to tell anyone its next move. We have to decipher that (read the tape) ourselves.
Sometimes, as Wyckoff said a century ago … ‘It’s as if the weight of a feather is all that’s needed, to push the market further or to reverse.’
So, let’s look at that feather (the butterfly) on the hourly chart.
Since we’re positioned short (DRV-22-05), the chart’s inverted to mimic leveraged inverse fund DRV.
Real Estate IYR, Hourly (Inverted)
The important part is we see a repeating pattern of trendlines.
Moving in closer, we have this. The blue arrow is ‘expected’ action based on the analysis up to this point (not advice, not a recommendation).
Moving even closer, the zoom shows IYR, finished the day in Wyckoff spring position; having pushed past minor support (resistance on non-inverted).
Summary
If IYR opens lower or gap-lower, we’ll have to wait and see if it posts a new daily low (below IYR ,77.24).
If that happens, we have some confirmation lower prices are ahead and can then set a definitive stop for DRV-22-05.
Obviously, a higher open (pushing past IYR 78.91), negates the trade.
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.
Both time cycles and Fibonacci are aligned … targeting intermediate low(s) for the Russell (IWM), in June.
This post, released late on Monday, showed a potential reversal set-up for the IWM.
The next morning (yesterday), saw a sharp, brief move higher which quicky reversed into a sustained decline.
That decline continues during this session.
The weekly chart of IWM is below; marked up with a Fibonacci time sequence.
Russell 2000, IWM, Weekly
Week 34, identified with the back font, represents a 1 : 1, Fibonacci projection of the initial leg down.
Week 34, in the magenta font, is a 1 : 1.618 projection of the same initial move.
These are projections only (not advice, not a recommendation).
However, there’s a time cycle study available at this link.
Go to time stamp 8:27, for the Russell 2000. The method is different, but the projection is similar; heading lower into early Summer (mid to late June).
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.
Russell 2000, attempts to break through resistance; reverses and then tests (Monday), just as ZeroHedge says the short squeeze is over.
There’s a lot of trying-to-make-everything-look-complicated, wording in the link above but the take-away is, the market may be finished with the recent short squeeze.
At this juncture, Russell 2000 (IWM) looks like it’s hit long-time resistance around the 211, area and reversed.
The past two trading days may have tested that reversal.
IWM, Daily Close
The support (blue line), now turned resistance has been in-effect for over a year.
The zoomed version below shows it’s clear, at this juncture, price action’s not penetrating resistance.
As with bonds in this report, we’re at the danger point.
This is where risk is least for either short or long (not advice, not a recommendation).
Naturally, with the ZeroHedge report (above) saying that shorts have been effectively covered, price action direction favors the downside.
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 not always what’s happening; it’s also what’s not happening.
‘The curious incident of the dog in the night-time’ … the dog did not bark and so indicated, it knew the killer.
In Steven Van Metre’s Sunday night update (time stamp 5:55), he highlighted that small caps, IWM, (Russell 2000) tracking fund is in a ‘crash pattern’.
We’re going to look at the small caps and see what’s there and what’s not.
Russell 2000 (IWM):
Weekly Chart of IWM
The up-thrust is clear … we can see that.
However, the question is, what’s not happened with this (potential) set-up?
Moving to the daily chart, it shows the up-thrust has not been tested.
There’s no rule that says it has to be.
However, price action shows a spring set-up and retrace in process (below). We also have a Fibonacci target that looks like it might work out.
Moving closer in on the daily.
A retrace to the 62% level, would (could) act as the test of the up-thrust shown on the weekly chart.
That move if it takes place, would create its own up-thrust of the resistance area (below the 62%, level).
On top of that, we may have financial media helping out by getting participants on the wrong side; if so, they’re likely to foment news stories of continued ‘recovery’ or ‘inflation’ moderating … or some such non-sense.
The Media’s Role
In fact, if we get a retrace and the press does not jump on board … I’d be wary of the set-up (not advice, not a recommendation).
Remember what a good job they did with gold … $3,000/oz, is “imminent”, right?
Gold Down, Market Up?
Is that possible?
For starters, the question is what’s called a ‘mind-trap’. A certain way of thinking that causes one to get boxed-in.
The dollar continues its rally and gold appears to still be inversely correlated. We’ll stay with that as the main indicator of GDX downside potential.
Yesterday, it was thought the up-side correction in GDX, was complete … and that may still hold true. Today’s action looks like a minor test (thus far) of that correction.
Note, at this juncture, heavy-hitter, NEM, has posted out-side-down from yesterday’s price bar … hinting that it’s ready to continue lower.
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® 