American Tower: Update

AMT reaches another Fibonacci target.

We’re going to stay with chart labeling and retrace positioning as described in the last update.

The fact price action oscillated around the previous target (early in the session), then moved up, tells us there’s a more significant pattern at work.

Using that, we look at the AMT close. The ‘x’ location was a 38.2% retrace. Now, today (‘z’) we’re right at 50%.

Note the advance as slowed.

Net distance covered today is significantly less.

The parent index, real estate IYR, could not follow through to the upside; even after Friday’s aggressive move.

At session close, IYR just posted a reversal bar on the hourly chart.

We’re remaining short via DRV (not advice, not a recommendation).

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.

Elliott Wave: American Tower

Paul Harrell likes to start his videos with:

‘The next twenty minutes are going be long and boring. You might want to skip to the end to see the conclusion.

His rabid and loyal fans then proceed to hang on every word of his self professed ‘boring anecdote’ until the very end.

Not saying this site’s in the same league as Harrell’s.

Just saying, the following is going to be a tedious discussion of American Tower (AMT) and how it just might be ready to start an Elliott Wave III, down.

Market Extremes:

Its been no secret. The markets are at price levels and valuations never before seen.

In this site’s opinion, going long anything, is insane.

There could be a break, upset, world event, container ship run aground (oh, wait…), cyber attack, volcanic eruption (oh, wait …), major earthquake, nationwide weather freeze (oh, wait…) food supply disruption (oh, wait…) bond bear raid (oh, wait…) currency devaluation, or any myriad of disconnects that would instantly change the dynamic.

Change the dynamic in such a way as to make low-risk long exit, or short positioning impossible.

This site has documented several times where major brokers have already gone off-line as a result of markets fluctuating to the upside.

What happens when it turns down? Good luck getting out.

Looking for the (short) entry:

Its been an on again, off again, and back on again affair with shorting real estate, IYR. Anecdotal evidence such as Jerimiah Babe’s updates from his area, show the market’s been vaporized and is not coming back.

We’ve shown from a Point & Figure chart perspective, IYR has built significant price action congestion.

In Wyckoff terms, congestion equals potential.

The IYR index has built enough congestion that if/when the reversal comes, price action has potential to decline below the 2009, lows.

American Tower (AMT) Symmetry:

Now, for the analysis of AMT.

We’re going to start with the daily chart which has an interesting pattern of equal distance moves (or waves):

This equal move structure gives a hint that something’s up. The market’s moving in an orderly fashion. But what order?

To add more intrigue, we’ll go to the weekly chart. We see each retrace of the two initial waves, was Fibonacci 62%.

The last retrace (up to Friday’s close) is essentially 100%.

Looking up Elliott Wave “equal waves” turns up this presentation. It helps some but does not cover the current situation. The take away from the video is that equal waves do occur.

Looking at the daily close chart of AMT gives us this:

The Wave 1, down is placed at the low extreme. Price action then corrects to pivot (magenta oval) at the Fibonacci 38.2% retrace level.

It’s a near perfect retrace.

The reason to think AMT just finished a complex correction that terminated at “z” which is also “2”, is the structure of the fifteen-minute chart below.

The first chart is unmarked except where price action changes character:

Then we put in the Fib projection tool at that location; the inflection point, to get the following:

Incredibly, the top of Friday’s price action is also a Fibonacci target (423.6%) projection.

Getting back to the daily chart and labeling it using the above information gives us this:

Removing all but the labels is more clear:

There could be other ways to label the structure. It may become (very) apparent at the next open whether this interpretation is correct.

However, coupled with yesterday’s analysis of IYR, and its technical condition (at the extreme), we get the sense we’re close to some type of price action hesitation or outright reversal.

Summary:

We’re short this sector via DRV (not advice not a recommendation).

Price action appears to be at extremes and is meeting Fibonacci and support-resistance levels simultaneously.

Not related but an interesting coincidence (maybe): Van Metre’s update on Friday night:

“Is This a Sign Real Estate Prices Have Peaked?”

The futures markets just opened … S&P down 7-points. Let’s see what happens next.

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.

Early or Late?

It may have been Robert Prechter Jr. that said years ago;

‘You’re either going to be early, or late’

He then went on to say his trading method usually puts him in a little early on the move.

That means there are times when the anticipated direction does not materialize.

So, your either suffering through the pain of anticipated reversal (for seconds, minutes, or days), or you’re chasing the market.

You make the call.

There really is no other choice.

Both methods involve psychological pain.

Referring back to Prechter, he also said some of the best traders he knew were former Marines. By definition, they are well trained to deal with pain.

My former mentor, the late David Weis would say after hit on a set-up, if conditions warranted, he would enter again; as he told me, he would ‘stick his chin out’ and effectively tell the market to ‘prove him wrong’.

It was an interesting choice of words for him as one can see from his training video …. he had a distinctive chin.

Trading Style:

The trading style presented on this site is a combination of Wyckoff tape reading coupled with anticipating price action.

As inferred above, that means there may (and will ) be times of draw-down while working to enter a market reversal.

That’s where we are now.

Trade Actions:

Yesterday’s upward action in basic materials forced the ‘project’ out of its short (SMN) position. That sector may attempt to make a new 52-week recovery high before it’s ready for reversal.

Analysis: Real Estate, IYR

One market that did make a new 52-week high, setting up technically for a short, is real estate:

The weekly close of IYR has been inverted (turned upside down) to show the unique technical condition.

IYR has created a large terminating wedge that’s in the process of a ‘throw-under’. At times a market will attempt to breakout of a wedge in the opposite direction of eventual reversal.

This type of breakout tends to fail. Based on the dashed line contacting a prior congestion, there’s’ potential to at least hesitate in this area.

The daily chart below provides additional nuance:

It’s clear price action has contacted two prior areas of support – resistance during ‘throw-under’.

Anything can happen but it seems that IYR’s at maximum extension.

On Friday, IYR price action closed just 0.05-points off its high for the day. That high was also a 52-week high.

We’re now in a support-resistance zone.

If IYR is to move significantly higher, it might need additional fuel (a retrace lower) to break through.

Positioning:

The action then (not advice, not a recommendation) was to short the market via DRV.

Once again, the market itself is telling us where to go for opportunity.

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.

Real Estate Reversal

If IYR’s reversing, we’ll get continued downside action.

Earlier today, low risk potential for going short IYR (not advice, not a recommendation) was presented.

At this juncture, risk for going short is approximately the distance from today’s high to the last session high … about 0.49-pts.

The past four sessions have posted lower daily highs, lower daily lows.

Today was a test of the reversal. Volume was down significantly (-63%) from the prior session.

Contracting volume on the way up shows lack of commitment. The reversal has been tested; at this juncture, there are few buyers.

From here, expectation is for lower prices; beginning with a lower open at the next session.

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.

Project Update

Early today, LABD was exited having hit the stop.

If there is a story for the day, it’s the long bond TLT.

Potentially a nascent reversal.

Interest rate sensitive markets, like real estate, appear positioned for reversal as well.

Inverse fund DRV above, shows penetration below support and then testing action today.

We’re at the extremes of price action. IYR and DRV do not need to go far to confirm or negate a reversal condition.

At this point (1:03 p.m. EST) our ‘project’ has no position … although DRV looks enticing and low risk (not advice, not a recommendation).

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.

Real Estate Channel

Yesterday, real estate IYR, may have formed a trading channel.

Update: 1:17p.m. EST. IYR has pushed past the channel. Short position via DRV exited (for now).

A new daily low (today) within channel boundaries would help to confirm.

If so, then stops for the long standing short position (via DRV) will follow down the outside right channel line.

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.

Test, Then Reverse

Today’s price action in real estate (IYR) looks like a test of the failed breakout (up-thrust) from February.

This session, price action came all the way back to support (87.90), which is now resistance.

The important part, the level did not hold. Late in the session there was erosion and retreat to close well below the day’s highs.

This type of behavior is near textbook for a significant reversal.

From a trading perspective, the short position via DRV was maintained (not advice, not a recommendation) except for reducing the position by about 2.5% … essentially negligible.

Today’s test and erosion is one of those few times where probabilities are high; the market’s tested the up-thrust (failed breakout) and we can expect prices to decline from here.

One last note adding weight: Today is Fibonacci Day 8, from the high on February 25th.

With conditions noted, posting a test high today, then backing off … indicates downside ahead.

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.

American Tower, Leads Down

AMT’s the big cap leader in the real estate sector, IYR. Four weeks ago, a potential reversal was covered in this report. Since then, it’s been a dramatic move to the downside.

Early Session Update, DRV as noted below:

The weekly chart above, shows about 20-months of price action. Included (but faint to see) is the Fibonacci projection tool.

The same chart below, has key areas highlighted for clarity.

At this juncture, AMT’s adhering (almost exactly) to downside Fibonacci projection levels.

However, once it becomes obvious, markets tend to break away from predictable paths.

So, we’ll see what happens next.

At this point, there’s no doubt, AMT’s reversed down and not showing signs of a bottom

Positioning:

The firm’s position has not changed. We’re short this sector via DRV (not advice, not a recommendation). The last update noted the short position was increased during Friday’s late session rally.

At the trader’s discretion, DRV position is being maintained (past the soft-stop).

Summary:

This week’s action may tell us if we’re going to continue oscillating about the axis line discussed here, or if now’s the time for a decisive move lower.

In a forthcoming report, we’ll discuss market alternation and how the character of the AMT reversal has changed.

Stay Tuned

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.

Inflation or Deflation?

Is the latest stimulus bill inflationary or deflationary?

For those adhering to the tenets of Wyckoff analysis (as this site does), you already know it’s sort of a trick question.

The answer is: It doesn’t matter.

Maybe a better way to put it, it’s the wrong question.

The right question is: What’s the market saying about itself?

The market itself will decide (or reveal) the next probable direction.

Before we get to the charts; remember, one objective for the (U.S.) markets and political kabuki theater is, destroy the middle class.

Exactly how that’s going to happen in the final act is unknown.

Perhaps it’ll be illegal to go to the bullion dealer (or the grocer) without proof of protection (injection). Problem solved.

That destruction remains the backdrop; the macro for the analysis.

Moving on to the charts:

Real estate remains in a terminating wedge. Last week’s action had IYR contact the lower wedge boundary and then retrace into the close.

Weekly volume was the highest since the week of March 13th, 2020, almost exactly one year ago.

So, we see the ‘face ripping’ Friday rally, ‘plunge protection team‘ action, had no material effect on the chart’s technical message.

Looking at it a different way, there’s also an axis line in play.

Market oscillations about axis lines are completely normal.

We’ll see if Monday’s action is ‘buy the rumor, sell the news’. We’ve already had buy the rumor (stimulus) with Friday’s rally.

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.