Oil Today … Gold Tomorrow

Commodities, Have Peaked

First, we’ll review oil; tomorrow, we’ll look at gold.

From an intuitive standpoint, you can almost feel it.

The oil and gas sector has launched to unsustainable highs.

Behemoths like Exxon (XOM) with its 63,000 employees have gone from below $30/share to above $110/share, an increase over 280%, in just two years.

In the history of the equity, going all the way back to 1984, that’s never happened.

Even in 1987, before the crash, XOM was up for the two-year period, a paltry 108%, by comparison.

Now, data is coming in nearly by the day about collapsing demand, layoffs accelerating, and inventories piling up.

The latest from Steven Van Metre, at time stamp 4:25, discusses just how fast the downdraft is, and will be.

Important Note:

Before we leave the Van Metre link above, at time stamp 8:50, the assertion is made of what the Fed will do when slower growth data comes in. i.e., interest rates will be halted or lowered.

Nassim Talib called this kind of thinking “Normalcy Bias”.

The opinion of this site is, it’s a trap. Thinking what happened last time, will happen this time.

Let’s mentally bookmark this post and come back six-months from now to see what happened.

We’re in uncharted territory and other agendas are at work.

Like ‘bread and circuses’, the ‘pivot’ discussion is a distraction … keeping the proletariat placated.

Demand Collapse

We’ve got demand collapsing on a daily basis right in front of our faces and yet, it’s a big mystery (to some).

What’s not known, is how the general population will react to undeniable truth when it finally hits, en masse.

We have a good hint of what’s in store as reported by Jerimiah Babe during the first minute of this report.

Moving on to the Oil & Gas Sector.

Oil & Gas XOP, Weekly

The weekly chart shows the multi-year resistance area that was tested (and rejected) back in mid-June, last year.

The next chart shows we also have a terminating wedge.

Price action has come back to the lower boundary; suggesting a breakdown is a probability.

If we get a breakdown, measured move support is identified at approximately -47%, below current levels.

Strategy & Trading

Obviously, the charts paint a bearish picture.

Over the past week, XOP was covered here and here.

The first link discussed how price action was very close to making a new daily high. That happened the next session (Friday) and indeed, it had Wyckoff ‘spring’ characteristics.

Price action moved higher and closed higher for the day, but it did not post a new weekly high … keeping the bearish case on the table.

A popular leveraged inverse fund is DRIP (not advice, not a recommendation).

At The Close

As this post comes to a close, a quick check on ZeroHedge turns up this: ‘Tipping Point

We’ve jumped over ‘recession’ and have gone straight into crisis and 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

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

Discretionary Destruction … 2023

The Cash Squeeze

During 2022, we’ve had one short squeeze after another.

For 2023, it could be forced liquidation in the relentless squeeze for cash.

One corporate example of the squeeze is the announcement from CarMax; they’ve suspended their stock buybacks.

This ‘buy-back halt’, theme, needs to be added to the market strategy for the coming year.

We can put that on the list right along with skipped dividends, power outages, market outages, internet cyber-attack and supply chain disruptions.

A comment below, posted in yesterday’s update from Jerrimiah Babe, opines the typical consumer’s going to carry on unabated, until the very last minute.

“I don’t believe most people will stop spending until all access to credit is exhausted. Whether it be cards, after-pay, family, theft most will continue to keep up appearances. I honestly think most could be 2 months behind on their mortgage or rent and still be spending on crap. There’s no financial responsibility or discipline anymore.”

How that may translate to the mainstream is, they continue to report ‘the consumer is strong’ until instantly, overnight, they’re not.

Possible timing for that event may be late January, or mid-February (not advice, not a recommendation).

With all that in mind, the last post identified Netflix and Target, as potential candidates for significant downside opportunity.

‘Significant’, meaning a 50% to 90% decline from current levels (not advice, not a recommendation).

Target TGT, Yearly

The year is just about over so let’s start with a very long-term view.

Two things have happened over the past three-years.

Price action has met a measured move out of the wedge as shown; then, a massive downward thrust.

It’s important to note, this year’s down-thrust, dwarfs the previous one during the -64.7%, decline of ’07 – ’09.

There’s a band of support that’s at least nine-years wide, in the vicinity of 50 – 75.

We’ll discuss that in another update.

Netflix NFLX, Yearly

Technically, Netflix is worse than target. That is, it has the potential to decline farther and faster.

NFLX, has support as well but comparatively minor in the area of 50.

It does not become significant until the wedge (blue lines) in the vicinity of 5 – 10.

With Netflix’s ‘product’ being completely discretionary, it’s ultimate downside potential, from a fundamental standpoint, surpasses that of Target.

Summary

Time permitting, shorter timeframes will be presented.

However, since the primary focus of this site, is first on ‘strategy’ (think dollar rally), we’re interested in the larger timeframes.

That in turn, provides background to drill down further for any trade decisions (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

Bond Market, Signals Trouble

It’s Not About The Fed

The potential for a sustainable bond reversal was identified way back in mid-October.

Now, over a month later with bonds moving decisively higher, the ‘narratives‘ are out in force.

Those narratives revolve around ‘pivot me this, or ‘pivot me that‘, or an infinite number of the same variations.

The reality is, there’s not going to be any ‘pivot’.

Even if there was, as Michael Cowan reported weeks ago, the market keeps crashing anyway (not advice, not a recommendation).

With that in mind, a popular narrative is that bonds are higher because the Fed will lower rates when they see we’re in a ‘recession’.

Well, they won’t ever see a recession because we’ve skipped that part; going straight to collapse and economic depression. 🙂

Of course, as Jerimiah Babe puts it, Americans won’t do a thing to get ready until the last minute … most likely after the market is down 50%, or more.

Instead of the placating, proletariat calming narrative, it’s a recession; maybe bonds are moving in response to those in the know … something much worse may be ahead.

Could bonds be signaling, we’re close to a market rout?

Bonds, TLT, Weekly

We’re going to start with the original analysis, showing the potential for a sustained reversal.

From the October 16th, post.

A month or so, later.

As with the dollar analysis from years ago, a weekly bullish divergence as we see here, may result in a rally that lasts longer and goes farther than anyone expects.

Of course, the real question is ‘what does it mean?’

As Wyckoff said over a century ago, we won’t know the full reason for a move until it’s over.

One view of it however, different from the accepted narrative, we could be headed for some kind of disconnect; those in the know are shifting to ‘relative’ stability.

Moving on to other markets, we have the following:

Positioning

Not advice, not a recommendation.

The push higher in biotech SPBIO, discussed in the prior update did not materialize.

Instead, we got a new daily low, followed by some upward testing action.

A day-trade in LABD was opened and closed; then near the market close, opened again.

Details are as follows

LABD-22-12:

Entry @ 19.9134***: Stop @ 19.10***

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

***, Indicates change

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

Relentless, Collapse …

Jerrimiah Babe, Calls It

In probably his best video update since he stared in early 2015, he lays out the details of what’s ahead.

Although not well versed in the markets (and he says so), he has enough experience, life-knowledge, to understand the current potential and likely outcome.

That is, ‘relentless collapse’.

Those of us who have been getting ready for years, know that we still aren’t ready. How can anyone be fully ready for a complete systems breakdown.

One ‘system’ that’s set for implosion and has been since before ‘The Speck’, is biotech.

Biotech: Cue The Implosion

It’s been an on again, off again, back on, and so on, with this index (SPBIO).

Every day now, sometimes multiple times a day, we see the effects of their ‘protection’. Wheels are in motion and we’re most likely just getting started … for decades to come.

Yesterday’s Fed announcement, may have (finally) provided the up-thrust and reversal needed to get this index in a sustained down move.

Biotech SPBIO, Daily Close

The daily chart shows the up-thrust test and reversal.

We’ll get into downside potential(s) in an upcoming post.

For now, the positioning remains unchanged (not advice, not a recommendation).

Positions, Market Stance (courtesy only, not advice).

TMF-22-01:

Entry @ 7.166, Stop @ 6.77

LABD-22-09:

Entry @ 19.88, 19.71, Stop @ 18.69

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

***, Indicates change

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

Gold … Ready To Move

Up or Down ?

Before we get started, no analysis would be complete without the latest mega bull forecasts for gold.

Here they are:

“Everyone Is WRONG About This Cycle” – Peter Schiff

Well, ok. I only have one bullish report.

Since it’s from Schiff, do we really need more? 🙂

Remember, back when it was the Russians that were going to move gold higher? You really can’t make this stuff up.

So, let’s move on and take a look at the truth … the price action for gold (GLD).

Gold (GLD), Daily Close

The un-marked daily chart shows about three-years of price action.

The next chart shows the ‘Changing of Hands’ that was first identified over four months ago in this post.

Also shown is the current (channel) trendline that appears to be in effect; GLD, is ‘respecting’ the line.

The left side channel line is grey in color so that multiple hits are shown more clearly.

However, the next chart is where it gets interesting.

If or when GLD penetrates support, it would by definition be set-up in Wyckoff ‘spring position’.

If GLD, was going to launch to new all-time highs, getting itself into ‘spring position’ would be an excellent place to start the move.

If and when there’s penetration of support, one thing to watch closely is the volume.

Would it be another high volume ‘changing of hands’ (for the upside) or a low volume affair that grinds on down.

Summary

From a fundamental standpoint, where’s the money going to come from to increase the demand for gold?

We’re already at the front end of (very likely) the largest real estate crash in U.S. history.

The consumer’s tapped out with record high credit card debt; mass layoffs have already started.

Bankruptcies in some areas are up over 100% from last year. Bankruptcy means ‘liquidation’ and that includes any precious metals.

Anything can happen and gold could rally.

However, the backdrop of demand destruction and asset collapse, suggest the direction for gold continues to be to lower levels.

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 ‘Santa Claus’ Rally

That Was it!

It’s going to be a very different place come December.

This won’t be like ’08 -’09, where all the stops are being pulled to ‘rescue’ the market.

No, this time really is different.

We can all see by now; the plan is controlled demolition.

Paraphrasing Jerimiah Babe, and Pinball Preparedness, we haven’t even got started (with the collapse) and the public’s already folding up.

What’s it going to be like when it really hits?

This past week, all the major indices have gone through some type of relief rally. Call it a Santa Claus rally because there probably won’t be one this December.

Trading Consistency

Throughout this upward correction, the case has been made over and again, only biotech SPBIO’s in a technical (and fundamental) condition that would allow it to decline farthest and fastest (not advice, not a recommendation).

Wyckoff analysis along with Livermore’s strategic approach that’s coupled with Loeb’s ‘focus’, has led us to (shorting) this sector exclusively.

Strategy, Tactics, Focus

Biotech SPBIO, Weekly Close

Looking at the far-right side of the chart, SPBIO rallied this past week. It looks like it may head higher … that is, until we put in the trend-lines.

Now, let’s put in the trendlines.

Extended trendlines show the downside potential.

We’re about to see how this works out.

Friday’s upward action in SPBIO slowed with inverse LABD, posting narrow (downside) action as well.

Ready to reverse.

Summary

Trading action in the past week amounted to reducing the position size in LABD-22-05, by about 4.6% (not advice, not a recommendation).

If and when SPBIO continues is downward trajectory, that position (shorting via LABD) will again be increased as the market allows.

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

What ? … There’s No ‘Pivot’ ?

There Never Was

Well, another financial media lie has come and gone.

As Jerrimiah Babe says, time stamp 6:05, at this link:

“The good times are over.”

The Dow Jones was down over 1,000 points on the day and finished (along with the S&P, NASDAQ) right at the session lows.

Typical action for the markets under such conditions, is a follow-through at the next trading session, Monday.

Recall, it’s been presented many times on this site (Holiday Turns), major reversals tend to occur just before, during, or just after, a holiday week.

The 2008, countertrend reversal took place on the Monday (5/19/08), leading into Memorial Day Weekend. The big one in 1929, was the Tuesday (9/3/29) following the Labor Day Weekend.

The current reversal (discussed below), if it holds, has come a couple weeks early in the ‘holiday’ window.

It’s possible because of the massive size of this monster, that a week or two does not make a difference.

Let’s look at the Dow 30 and its perfect Wyckoff Up-Thrust, Reversal, and Test.

Dow 30, DIA Daily Close

Daily Close with Fibonacci retrace levels identified.

A close-in look on the reversal area.

Looking at the zoom-chart above, we had a Wyckoff Up-Thrust that touched 61.8%, then declined sharply before coming back to test at 50%.

After the test was another sharp decline. One can make the case, the up-thrust has been tested.

Continued (overall) downside is the higher probability with a ‘no Fed pivot’ providing the tailwind.

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

Recession First … Depression Next

The Last Place To Be … Real Estate

The most illiquid of all ‘assets’: Real Estate

Two quarters of negative GDP (even with cooked books) equals recession.

Next up, full-blown depression.

Some would argue (like J.B. and Dan) that we’re already in a depression … we skipped the recession part altogether.

Do not pass Go. Do not collect $200.

Anyone who thinks the Fed’s going to ‘pivot’ because the numbers are weak, does not understand (or won’t admit to) the real purpose of the entity; but I digress.

The Strategy

Way back in December of 2020, this post was released which discussed ‘Genesis 41’, specifically.

It was an intuitive assessment; we’re in a phase where corn and grain (i.e., the food supply) are potentially more important than ‘stacking‘ silver or gold.

Over the ensuing year and a half, how correct, that has proven to be.

Then, nine-months ago, was this post, presenting the ‘elephant’; a massive population decline whose repercussions would last the lifetimes of anyone reading.

Now, we have this. A report that confirms the elephant.

It’s all starting to hit the mainstream, although the language is still being couched to not cause undue panic. Good luck with that.

So, what’s next?

The Danger Point: Real Estate

While mainstream press and money managers alike struggle to figure out the obvious, we have price action itself telling us the next likely direction of the market.

During an economic downturn there are many places not to be such as semiconductors, airlines and other low margin businesses, restaurants and so on.

However, the most illiquid of all, is real estate. It does not matter how bad one wants to sell, if there is no buyer, there is no sale.

Real Estate IYR, Weekly Chart

Last week, real estate IYR, closed right at the Fibonacci 23.6% retrace as shown.

Getting closer in on the daily, it’s marked up to show the risk from a shorting perspective (not advice, not a recommendation).

Real Estate IYR, Daily Chart

In this case, the risk on a short position is defined as the distance from last Friday’s high (IYR: 93.96) to that same week’s high of IYR: 95.0

Let’s add, Friday’s action saw IYR, retrace a Fibonacci 76.4% (the most available) of the entire move for the week.

The Summary

Amazon (AMZN), ProLogis (PLD), and Real Estate IYR, are joined at the hip.

Now the economy’s imploding, massive warehouse space is not needed.

Ditto that for employees as well.

ProLogis is already down – 31.2%, from its all-time highs set just this past April.

We’ve already shown PLD, has a nasty habit of going straight down during a market route.

Last time, PLD, crashed over – 84%, in just two months.

It’s likely to be worse, this time around.

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