Real Estate … Ready for Reversal

Unrelenting, Down Data

‘The economy has already collapsed’.

That’s from Jerimiah Babe and is likely, correct.

Recent data-points supporting the case for ‘collapse already in progress’, are below:

American’s spending drops … again.

Pending homes sales worst annual decline … ever.

There are nine other supplemental data points for the economic mayhem, collapse, collapse-in-progress scenario; they are listed at the end of this post.

For now, we’re talking about real estate and specifically the proxy for the sector, IYR.

Real Estate IYR, Weekly

As stated in the last post, we’re going to follow-up with a potential IYR, downside reversal by covering three more technical points; Fibonacci time correlation, thrust energy and trading channel.

First up: Last week completed a Fibonacci 34 (-1 week) time frame that may result in a reversal into a trading channel (shown on second chart).

Upward force (Thrust Index) declined significantly over the prior upward push during the week of 1/13/23.

The weekly chart has been compressed and trading channel lines added.

Internal trendlines are printed as grey dashed lines.

As shown, we’re at ‘Week 34 (-1)’.

If this market’s in reversal and adhering to a Fibonacci time sequence, we could see an immediate reversal or another minor high next week to make it an even 34 or go one additional week to make it 34 (+1) weeks.

Either way, we’re at The Danger Point®

The 1929 – 1932 Trading Channel(s)

Here’s a bit of insight you’ll not find anywhere else.

Research and data gathered by my firm, has shown markets tend to reverse just before, during, or just after a Holiday Week.

In our case below, The 1929, all time high was 379.61, posted on September 4th; the Tuesday following the Labor Day Weekend.

The final low and subsequent reversal was 41.81, posted on July7th 1932; the Thursday following the July 4th Holiday:

Enough Said.

Chart provided by macrotrends @ www.macrotrends.net

There are at least three main trading channels in effect for the entire (nearly) three year down move.

Trading channels are an old and repeating characteristic of the markets.

Real Estate Re-Cap

The all-time high in real estate IYR, was 116.89, posted on December 31, 2021, the Friday before the New Year’s Weekend.

Since then, there have been several trading channels in effect; at this juncture, we may have yet another.

With the data links provided at the beginning and the links at the end of this post, sustained price action to the downside is more probable (not advice, not a recommendation).

This coming week is likely to be quite interesting as the Fed continues on its path of price and demand destruction.

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

Addendum

Congratulations on reading this far. You must be serious about your work. Supporting data for the bearish case is below.

Housing data stabbed in the heart.

Blackstone redemption limits

Population set to collapse or is already collapsing.

Real estate fire sales … just the tip?

Home sales biggest annual drop.

New ‘protections‘ affecting the market?

Copper prices at record highs.

Pilots with bad hearts? No problem.

Where did all the workers go?

Real Estate’s Potemkin Village

The ‘Pain Trade’ = Opportunity

‘Some of the best market traders are former Marines.’, Prechter

That’s a paraphrased quote from Robert Prechter Jr., given during an interview in the early 1990s.

The inference: Marines succeed at trading because they have been conditioned to endure and perform while being in pain … physical and mental.

On the other hand, the financial press, being ever so helpful during this unprecedented collapse, is all too happy to help analyze the situation by catastrophizing on how ‘painful’ the market feels.

We’re going to be ‘bathing in lava‘, according to them.

If we go to Jerimiah Babe at time stamp 1:36, the mainstream press is still touting ‘The consumer is strong’.

In other videos, Babe, has shown how devastated the real estate market really is … ‘boots on the ground’ reports at vacant malls, empty parking lots and new (unoccupied) housing developments that stretch for miles.

With that backdrop, let’s look at what the price action of real estate is telling us … is the consumer strong?

Real Estate IYR, Weekly

There are so many things happening in IYR, it will probably take several updates.

At this point, price action exhibits the following:

Currently in Wyckoff ‘Up-Thrust’ condition, potential reversal

On a close basis, IYR has retraced 38.2% of its entire move.

Repeating trend line(s) underside test.

Trading channel that’s a Fibonacci 34 (-1) weeks wide.

For the week just ended, Force Index is divergent (54.7%, weaker) than the last push higher.

We’ll look at the first three of those, below.

As the market came to a close on Friday, price action pushed through established resistance (and axis line) to end the week higher.

Price action’s in Up-Thrust condition, The Danger Point®

Next, we have on a close basis, a Fibonacci 38.2% retrace as well as testing the underside of a resistance/trend-line.

In the next update, we’ll discuss the possible trading channel and the pressures (Force Index) behind the last move higher.

There Will Be Great ‘Wringing Of Hands’

As always, anything can happen in the markets. The above is not advice or a recommendation.

Next week, we can expect the Usual Suspects to come out and provide their ‘expert analysis’ on what the Fed is likely to do or not.

The Fed on the other hand, has repeatedly said what’s it’s going to do; that is, raise rates.

Interest rate sensitive real estate already appears ready for reversal.

Let’s see what happens. next.

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

Oil … Gas … Gold & Newmont

Markets, At Critical Juncture

Nemont Mining (NEM), Gold, and the Oil & Gas Sector are at a critical juncture.

The rest of the major indices, Dow, S&P, QQQs, real estate (IYR), and so on, are in a similar position.

For this update, we’ll focus on Newmont (NEM), as it’s the largest cap in the Senior Mining Sector GDX, and a general representative of the commodities markets.

Financial collapse is a process, not an event.

Newmont topped-out in April, of last year. Exxon, the proxy for the Oil & Gas sector, may have reached its highs this past November.

Where’s The Inflation?

As Michael Cowan has just reported, banks are absconding with depositor’s money under the guise of ‘bail-in’.

If the fiat cash is so worthless, why are banks seizing it?

As Robert Prechter Jr., said years ago, ‘all fiat cash ultimately goes to zero’; the end game (most likely) for the dollar. However, it could be months, years, or even a decade before that happens.

For right now, today, this minute, the data is showing us, the banks want the money; ‘Show me the money‘.

With that, let’s look at the non-existent ‘inflation’ in the mining sector.

Newmont Mining NEM, Weekly

The first chart identifies the heavy volume and then test of wide price bars. This behavior is common in the markets; they tend to come back and test wide high-volume areas.

Next, we see there’s a terminating wedge developing as volume declines; the inference, is lack of significant commitment at these price levels.

We’ll get close-in on the wedge; last week printed a lower weekly low and closed lower for the week.

There’s no breakdown of the wedge … yet.

At this juncture, it’s up to the bulls to show they’re still in control.

Inflation vs. Scarcity

We have without a doubt, the effects of the event from the past three years gaining momentum. Whether or not those effects reach a peak this year, is unknown.

A lot of the mainstream and YouTuber’s alike talk about the upward move in gold as the result of ‘inflation’.

Here’s a little bit of insight you’ll not find anywhere else; how about gold rising because the above mentioned ‘effects‘ are causing production volumes to decline?

Maybe it’s because of scarcity (along with nearly everything else) that’s causing the increase in price.

Just to drive that idea home, the latest total gold production numbers, listed here.

Gold production for 2020 dropped -8.2%, from the year prior. Year 2021 was down -1%, from 2020.

From 2010 to 1019, gold production increased or was flat year over year … that is, until 2020.

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

The 15-minute, ‘January Effect’

That’s All There Was

If we use the S&P as the proxy, it hardly even lasted that long.

Going back to just four days ago, we had this (emphasis added):

“It’s well known, stocks tend to rise in the first weeks of January. Tax loss selling is over and there’s typically some type of ‘relief’.

Don’t count on it this time (not advice, not a recommendation).”

Market Meets Expectations

It was expected on the first trading day of the year, the market would continue its downtrend.

After this morning’s 15-minute blip, that’s exactly what’s happening.

We’ve already discussed real estate IYR, (here, here and here) as well as the Q’s (here).

Now, there appears to be another sign of impending price collapse … the oil sector; specifically, Oil & Gas Index XOP.

As is typical, we’ll begin the analysis with the longer time frame, the weekly.

Oil & Gas Sector XOP, Weekly

There’s no secret to the chart below other than Livermore’s admonition for going short; that is, he finds a market that ‘goes down and stays down’ (not advice, not a recommendation).

The prior two down-drafts were quickly retraced; one in mid-July last year and one in September.

Not so, this time.

If we go to the daily, we have an ominous look where a downtrend could be validated.

Oil & Gas Sector XOP, Daily

The right-side trend is drawn as a dashed line, revealing the attempted breakout on the last two sessions in December.

Attempted trend line and channel breakouts are normal market behavior.

It’s clear in the case above, price action has quickly got itself back into the trading channel.

Summary

Of course, oil prices are not supposed to go down, right?

At this juncture, look at all the conflict and potential supply disruptions that are possible.

However, the price of oil and the price of the exploration/production equities are two separate things.

The price of oil could skyrocket further, and yet, the equites still collapse. Bear markets are all about price, wealth, and credit destruction.

Typical short positioning trade vehicles for this sector are DRIP (-2X) and DUG (-2X), or to short the XOP directly (not advice, not a recommendation).

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

Asset Confiscation, Gaining Speed

Higher Taxes, Starting Today

But wait, it’s not just taxes.

According to this link, it’s not only higher taxes, but retirement accounts being hi-jacked through rule changes.

‘The bulk of the wealth of the American people.’

Not to be outdone, the IRS will increase penalties for under and overpayment of taxes as reported by Fox Business via Jerimiah Babe (time stamp 22:16).

At least it’s nice to know, implementation of the ‘$600’ rule will be saved until next year. 🙂

So, we have the context for the year 2023; i.e., wealth destruction, asset confiscation, fines and fees.

It’s a straightforward plan on ‘their’ part.

What’s also straightforward as reported by Babe, a large number of Americans don’t even know what’s going on let alone be willing to take action.

Then, The Elephant

Let’s not forget the ‘elephant’ that’s likely to be the biggest driver for 2023.

We see that elephant every day now and sometimes multiple times a day. It’s starting to reach the fringes of the mainstream with articles like this one.

Scroll down to The List … It’s No. 2

That elephant and its subsequent lack of demand (less population, fewer buyers) as a result, will likely affect real estate in a big way … for decades to come (not advice, not a recommendation).

The last update showed the weekly trading channels in IYR. The next chart goes further out to the monthly and identifies a Fibonacci sequence.

Real Estate IYR, Monthly

So far, we’ve had IYR on the daily (link here), the weekly (link here), and now the monthly, below.

Major inflection points on the monthly have occurred at Fibonacci timeframes.

Original Forecast, October

The analysis of the current set-up started way back in late October. Using a weekly chart, a potential Fibonacci sequence was identified that ultimately proved correct.

Real estate IYR, had its print high during Fibonacci Week 8, as shown below in the original forecast.

The next chart shows where we are now, again on the weekly timeframe.

Real Estate IYR, Weekly

Original Analysis & Forecast

The updated chart shows the subsequent price action.

Real estate IYR, has pivoted lower and posted tight price action over the past two weeks. Tight action typically precedes a breakout or directional move.

Summary

Anything can happen in the markets.

Even though a good analysis has been presented to indicate further downside for IYR, this Tuesday’s action will let us know for sure.

Typical vehicles to go short the sector are leveraged inverse funds DRV (-3X) and SRS (-2X) or to short the IYR directly (not advice, not a recommendation).

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

The Panic of 2023

Parallels To, The Panic of 1907

Pick up almost any trading book like Reminiscences of a Stock Operator, and you’ll find, the big money was made on the downside.

In Livermore’s case from ‘Reminiscences’, he saw a big crash coming, went short in a big way, and was then squeezed out of his positions during market rallies in 1906.

The short trades were too early; he blew up his account.

Undaunted, he took drastic measures to raise capital (hawked his car), got back in, shorted, and cleared over $1-milllion in profits near the bottom on October 24th, 1907.

The Ukraine War & The Boer War

As spectacular as his profits were, for us that might not be the most important part.

Take a look at the list below, paraphrased from Livermore’s account of The Boer War and overall economic conditions; see if it doesn’t match up to today.

The British were just coming off the Boer war, having spent hundreds of billions (in today’s Pound-Sterling), and money was tight.

There was significant wealth destruction world-wide.

The San Fransico earthquake of 1906, was causing economic disruption and the need for even more cash.

Note: As reported here, seismic activity is picking up. We’ve just had a major quake (again) in California.

There were plenty of warnings of an impending collapse but as Livermore puts it, the masses paid no heed as they were more concerned with baseball.

Fabrication & Fact

There’s some scuttlebutt, The Panic of 1907, was a fabricated event, used to usher in fractional reserve banking.

Is this all starting to sound familiar?

Now, we have the potential of Neo Feudalism, going right along with Universal Basic Income and Digital Currency.

That should be enough intro to get us to the chart at hand, Real Estate IYR, but first, this just out, on MarketWatch:

Worst Year, Since 2008.

It’s already the worst since 2008, and as Jerimiah Babe puts it, ‘we haven’t even got started’.

Reference time stamp 12:07, in the link and see if it does not match exactly with Livermore’s observations.

All of which brings us to real estate.

Real Estate IYR Weekly, Close

The chart shows the most conservative (modestly declining) trading channel

The next chart, is where it gets scary.

The second (potential) channel is declining at approximately -62%, on an annualized basis.

Weekly timeframes are presented here on purpose.

Doing so, gets us away from the everyday, every blip, analysis and looks at things strategically. It’s obvious, barring some kind of intervention, real estate’s in trouble.

The January of No Effect

It’s well known, stocks tend to rise in the first weeks of January. Tax loss selling is over and there’s typically some type of ‘relief’.

Don’t count on it this time (not advice, not a recommendation).

Even as this post is being created, IYR, is pivoting lower and possibly confirming the more aggressive right-side trendline (second chart, above).

Summary

We’ll end with more paraphrase from Livermore’s account of the panic.

He describes being in Ed Harding’s office (his broker), telling him that ‘now is the time’, ‘today is the day’. All the while, stocks were drifting, everything was quiet.

Livermore said to Harding:

‘The longer that stocks delayed, the bigger the break will be when it comes.’

Let’s see if that applies to us, exactly 100-years later (Reminiscences, published in 1923).

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

Real Estate … Day ’21’

Posts, Next Session

The next session will be a Fibonacci 21 days, from the IYR, intermediate high, printed on December 1st.

From that high, price action has declined, then bottomed, and is now in a retrace.

That retrace/test may have competed today with a weak attempt at new daily highs or we could see something more definitive tomorrow.

From a data release (i.e., ‘catalyst’) standpoint, the Chicago PMI, is scheduled for 9:45 a.m., EST.

Let’s go to the daily chart of IYR.

Real Estate IYR, Daily

The intermediate high is marked, and we see price action decline and now testing resistance underside.

If we go further down to the hourly chart … that’s where it gets interesting.

Real Estate IYR, Hourly

It’s clear we have a well-defined resistance that’s just below a 38.2%, retrace level.

Obviously, a push above this level and then reversal, is the definition of a Wyckoff ‘up-thrust’.

Summary

Fibonacci timeframes are somewhat approximate. If everybody’s waiting for it, it’s not likely to happen.

That’s why some Fibonacci reversal dates are either a day early or a day late … just to keep everyone guessing.

With that in mind, the test may have completed today, or it could tomorrow (Day 21), or the first trading day of 2023.

In an ideal scenario, we get a blip higher (above resistance) at the open tomorrow that’s quickly retraced (not advice, not a recommendation).

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

Trend & Channel

Get In … Get Out

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.

It seems to be all happening very quietly.

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

Biotech … Bear Flag, Break ?

The Character Has Changed

It’s been more than frustrating attempting to short biotech.

So far this year there’ve been thirteen attempts; some successful, but most were not.

None of the attempts have captured the ‘big move’ that’s overdue for this market.

The last post essentially gave up on biotech, but it seems like the potential just won’t go away.

This time, over the past two days, the character of price action has changed.

Re-capping briefly, biotech SPBIO, has been in a bear flag for over two months.

During that time, it’s been oscillating and coiling; looking for a breakout to the downside.

As of this post, there’s no breakout yet but we’re heading to the bottom of the flag, with a change of character.

SPBIO, Weekly

It’s important to note, the pattern below, is unique.

The sector data goes way back to April of 2009. During its trading history SPBIO, has never posted a bear flag with a two-plus month duration.

An expanded version of the chart is below:

Now, comes the interesting part.

Going to the hourly, we have a trend line and a breakdown of intermediate support in the SPBIO 6,390-area.

This is the change of character.

SPBIO, Hourly

Note that we’re deep within the bear flag and at the right edge of price action.

We’ve got the trendline as shown.

Price action during yesterday’s session, contacted that line six consecutive times.

As of this post (12:50 p.m., EST), price continues lower.

Summary

So, is this ‘the big one’?

The correct answer is that it’s unknown.

What we do know however, just by looking at what the market is saying about itself; there’s been a change, at least in the past two days.

Price action’s breaking through support levels and heading for the bear flag lows in the vicinity of SPBIO 6,125.

A reasonable expectation is for some kind of a bounce if or when it hits this area.

Positioning

Not advice, not a recommendation.

DRV-22-06: Closed***

Gain + 5.61%

Re-opened biotech SPBIO Short (not advice, not a recommendation)

LABD-22-14***

Entry@ 18.905*** Stop @ 18.39***

Note: Positions may be increased, decreased, entered, or exited at any time.

***, Indicates change

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

The Dominos Fall …

Cash Crunch, Layoffs & Bankruptcy

So, here we are.

Crypto FTX implodes, Amazon to lay-off 10,000, Health system(s) in cash crunch, solar farm Toucan Energy, goes bankrupt.

But wait, it gets better; Pfizer and Moderna, are going to investigate themselves.

All of this, just within the past few days.

At this point, it should be clear to all paying attention, we’re accelerating to the downside … at least in economic terms.

Market Disconnect

Yet, the markets appear to never-mind … going about their (manipulated) business as if nothing’s happening.

Walmart has even announced they are going to buy-back their own stock to the tune of $20-Billion.

Maybe, they’ll do it. Maybe, they won’t.

They fully admit (in the press release), the buy-back announcement, was to make sure the earnings report was ‘well received’.

The Next ‘Shoe’

Those of us ‘awake’, are collectively attempting to plan and position for the next shoe to drop.

We’ve got the usual suspects such as real estate and biotech; however, this link to The Burning Platform, could provide more potential catalysts.

Either way, disconnected market or not, one has the feeling it’s just a matter of time.

Life After The ‘Short Squeeze’

‘The shorts were carried out on stretchers’.

Well, yes and no.

As said in this update, the historic short-squeeze, while damaging to account P/L, was a huge public service.

This chart confirms the majority of short-positions have evaporated. Meaning, the potential fuel for relentless upside (from those shorts), is no longer there.

That fact is being mirrored in price action as we speak.

As covered above, two markets are hanging by a thread: biotech and real estate.

Both are bubbles on a world-wide scale, but biotech is the one that may affect all others.

Biotech SPBIO, Inverse LABD

As this post was being created, biotech leveraged inverse fund LABD, has just printed (as of 12:40 p.m., EST) outside-up; also known as a ‘key reversal’.

The daily chart is below.

LABD, Daily

To make it an official outside up, price action will need to close above yesterday’s close (LABD: 17.87).

We’ve already shown that SPBIO, price action has formed a huge bear flag lasting more than eight weeks.

Action from the past three days can be considered a Wyckoff up-thrust as well.

Now, we have a potential key reversal.

If so, this market may be in serious downside trouble.

Positions: (courtesy only, not advice).

Yesterday, JDST-22-05, was exited at 9.0341, with a loss of – 1.45%, so that focus (and capital) could be directed to biotech, SPBIO and inverse LABD (not advice, not a recommendation).

LABD-22-10:

Entry @ 18.1398, 17.565***, 17.65***: Stop @ 16.29***

***, Indicates change

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