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

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

No P/E ? … No Problem … Yet

Biotech SPBIO, Has No P/E

Is this like Carvana on steroids?

Looking at the top ten components of the SPBIO sector, making up over 14%, of the weighting, none have a P/E ratio.

The three largest weightings are listed below along with hyperlinks to their corporate summaries or research.

Beam Therapeutics Inc.: BEAM

Twist Biosciences Corp.: TWST

Fate Therapeutics Inc.: FATE

The Return on Equity for the list is Negative – 31.9%

With returns like that, it’s unlikely a positive P/E, is showing up anytime soon.

The Market Itself

Livermore worked to prefect his technique, searching for what’s going to happen in a ‘big way’.

Wyckoff discovered the market itself, decides on its next likely course.

Loeb presented the power of ‘focus’; Concentrated positions that eschewed the mediocre mantra of ‘a well-diversified portfolio’.

It’s important to note, Loeb was the former Vice Chairman of E.F. Hutton. The old commercials from the 70s, like the one linked here, were talking about him: ‘When Loeb talks, people listen’.

The Biotech Short

The vultures are circling this sector.

We’ve already shown in the last update, speculative volume on the 3X Inverse fund LABD, is literally off the chart.

The corporate links above, give us a potential ‘why’ for their short positioning.

All three of those companies have a common theme.

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

Real Estate … Critical Mass

Struggling to Break Out of Wipeout

It’s still early in the session and it looks like real estate’s in serious trouble.

A change of events putting IYR declining at – 99%, annualized.

Several charts of real estate IYR, are presented below; not the least of which is the location of the first ‘DRV’ (3X inverse, IYR), entry.

Strategy, Tactics and Focus are the three tenets laid out by Livermore, Wyckoff and Loeb respectively.

Strategy: The real estate sector is ‘finished’ for this bubble go-round. Look for significant medium to long term trading (position) opportunities.

Tactics: Use Wyckoff analysis to identify the exact location where risk is least; The Danger Point

Focus: Significant trading opportunities are rare. When one is found, it must be used to its fullest extent.

This site presents the method above, in real-time.

The first chart of IYR shows the location of the initial DRV entry (not advice, not a recommendation).

Real Estate IYR, Daily

Positioning short this sector has been fully documented here and here.

As a result of yesterday’s action, also anticipated and documented here, the sector may have pivoted into a sharper trend; a trend declining at – 99%, annualized.

Is that a hyperbolic statement? Not if it happens.

As this post is being created, we’re going to look at the hourly chart of IYR (below) and show that price action is struggling to stay away from that -99%, trendline.

IYR: Hourly Chart

We’re at the top of the hour (11:00 a.m., EST) and the hourly candle may have just confirmed the new trend.

Summary

As said many times on this site, when or if, a major break occurs, there will be no getting in or out (not advice, not a recommendation).

At this juncture, now fifteen minutes past the top of the hour, price action is still struggling.

If it continues lower, does not break the trendline and prints below last week’s low of 92.89, it’s a serious event; more confirmation of the new down-trend.

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

Real Estate … Showdown !

Let The Lawsuits Begin

Let’s see …

We already have lawsuits for ‘The Speck’, injury and death.

Then we have the lawsuits because the stock price went down (always happens).

Now, we’ll have lawsuits for paying too much over asking price, because my real estate agent told me to.

Couple that with grocery store shelves going empty, power outages, fake wars (with real consequences), more corporate layoffs and voila!

The court case for any of the above, might be heard before 2030 … if you’re lucky, not homeless and we’re all still alive.

Was That, The Bounce ?

Yesterday, Wednesday was supposed to be the last chance for the bulls. The release of the CPI, being touted as a potential upward ‘catalyst’ for an already oversold market.

We even had helpful advice like this, saying ‘it’s so bearish, it’s bullish’.

Buried within that article was the caveat, extreme negative sentiment contrary indicators, only work in bull markets.

We’re not only in a bear market, it’s a full-blown collapse (so far). We’re on track for vaporization; all of which leads us to the market at hand: Real estate.

Real Estate, IYR, Daily Chart

The following chart contains a Fibonacci projection tool, showing levels from 23.6% to 100%.

Lower values such as 161.8%, are currently, off the screen.

It’s obvious, the market’s ‘respecting’ these levels as it hesitates (to confirm) before continuing lower.

However, the real story is on the hourly chart below.

Yesterday’s bounce is shown as well as a trendline.

The scary part, or good part depending on one’s perspective, that trendline’s declining at approximately 99%, annualized … effectively straight-down.

E.F. Hutton, Vice Chairman, Loeb

The late Chairman of E.F. Hutton said in his book ‘The Battle For Investment Survival’:

‘Real opportunities are rare. When you find one, it must be used to its fullest extent’.

This site adheres to tenets laid out by three masters: Livermore, Wyckoff and Loeb:

Strategy, Tactics, and Focus.

Shorting IYR via DRV (DRV-22-02) is our approach to what looks to be a significant opportunity (not advice, not a recommendation).

Summary

As long as IYR, price action continues to follow the trend lower, we’ll maintain short.

Anything can happen and the trend be violated … even at the next session about to start in 20-minutes.

However, at this juncture, probabilities for IYR, continue to point down.

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

BABA … Bull or Bear ?

The Level(s) To Watch

On one hand, BABA, has launched more than 60%, off its most recent lows.

On the other hand, that launch posted the highest daily, weekly monthly, and (about to be) quarterly volume, ever.

Markets tend to come back and test wide bar, high volume areas. Just that probability alone, coupled with the unprecedented volume behavior on four timeframes, points it to the bear side.

Shorting China FXI, via YANG, discussed yesterday (not advice, not a recommendation), is essentially a BABA short as that equity is weighted more than 10%, in the FXI.

So, let’s take a look at what BABA, is saying about itself.

BABA, Weekly Chart

The massive weekly volume highlighted below.

Next, we have a not-so good-looking picture (for the bulls).

BABA may be posting a long-term Head & Shoulders top.

Next, is the daily with its largest volume ever as well.

Getting closer-in on the daily, there are support levels to watch.

At this juncture, early in this session, we’re at support now. Breaking down puts the next, less defined support into play.

Positioning

The last post, showed what was then current positioning in FXI leveraged short vehicle, YANG (not advice, not a recommendation).

During the session yesterday, the YANG position was increased substantially. Essentially, the low-risk opportunity was used to its fullest advantage.

This method of trading goes way back to Livermore, Wyckoff and Loeb

Livermore:

Focus on the big picture and strategy. Look for the (potential) big move.

Wyckoff:

Use what the market is saying about itself to find the danger point. The point of least risk.

Loeb:

Real market opportunities are rare. When one is found, it must be used to its fullest extent.

Do NOT diversify. Focus positions and time the market.

Summary

As always, anything can happen.

BABA is currently at one of its support levels and holding for now … bulls still have a chance.

Obviously, the active trade, YANG-22-01, is taking the bearish stance. The plan is to have a tight, in-the-green stop, soon (possibly today’s low).

As this post stated at the outset, we’ve got all time high volume on four timeframes: Nearly a bearish case in itself.

The high-volume area may be tested.

That means BABA (and FXI) price action would need to move lower to perform that test.

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 Battle for Investment Survival

Late Vice Chairman, E.F. Hutton, Gerald M. Loeb

‘Opportunities Are Rare’

… And when you find one, you must use it to its maximum extent.’

That was the admonition from Gerald M. Loeb, in the above titled book.

It’s the exact opposite of ‘diversification’. The professional traders/speculators know this and so focus on a few or just one opportunity.

The months-long bullish hysteria in the gold market, gave an advance clue it might be a significant opportunity; the opportunity for a low-risk trade opposite the crowd (not advice, not a recommendation).

So far, that’s correct.

The gold bulls are trapped. Such events can go on much longer than anyone expects.

With that said, we’re focused exclusively on this market until it falls apart, we exit, or there’s another opportunity.

Now, on to the Senior Miners, GDX

GDX

We’ll get straight to the marked-up chart.

Looking at price action on a closing basis, the past four trading days were a test. The print high was on Tuesday (31.58) and the close high was yesterday (31.49).

The test was on underside resistance and looking at the chart, that underside was also an axis line.

Next, we see at least one trading channel with the possibility of an extension to other channel lines.

If these other channel lines are in-effect … meaning we’re really in the wider channel(s) but it’s not yet verified, that represents some serious downside potential.

Positioning

The past three trading sessions allowed the opportunity to increase the short position via DUST (not advice, not a recommendation).

A previous post said that positioning was essentially complete. However, the market kept providing opportunity to go short.

Market action directs trading action. The total size (via DUST) was increased by about 8.7% (not advice, not a recommendation).

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

Livermore, Wyckoff, & Loeb

Buffett’s not on the list

After thirty-four years of researching the markets, focus has narrowed to three masters from the early 1900s; providing a solid framework for addressing the markets of today.

More detail on these masters can be found at this link.

Summarizing their knowledge as follows:

Strategy, Tactics, & Focus

This update demonstrates how those tenets are being implemented.

Strategy:

In Livermore’s fictional autobiography (Reminiscences), he muddled around for years before identifying his niche.

That is:

‘What’s going to (or what’s likely to) happen in a big way.’

That insight has been used to identify the biotech sector as ripe for complete (and well deserved) implosion; more so than any other sector in the market.

For many months, the case continues to build for collapse.

Here’s just one more brick in the wall; providing even more support for implosion.

Tactics:

Wyckoff committed his entire professional life to decoding the market and its moves.

He is (as far as available data shows) the father of technical analysis.

Terms like ‘support’, ‘resistance’, ‘accumulation’, ‘distribution’, did not exist before is treatise, “Studies In Tape Reading”, published in 1910.

His bottom line:

Price is moved by a force of its own; having nothing to do (in a causal way) with fundamentals:

‘What is the market saying about itself.’

The biotech sector SPBIO, is tag-teaming with gold miners GDX (and GDXJ), for downside leadership.

SPBIO finished the week down -27.5%, from its February 9th (2021) high; running a close second to GDX, which finished the week down – 27.6%, from its August 5th (2020) high.

From a speed-of-decline standpoint, biotech’s in the lead.

Focus:

Loeb’s brutal admonition was: ‘The naïve, lazy, mediocre, ignorant and the incompetent “diversify”.

His follow-on corollary was: ‘Real market opportunities are few. If one is discovered, it must be used to its maximum extent.’

Loeb’s assessment of those in the market, is not much different from Wyckoff’s:

“The average man never makes a success of Tape Reading.

Right you are! The average man seldom makes a success of anything.” (emphasis is Wyckoff’s).

From the above list, ignorance can be fixed through determination, study, tenacity and the never-ending search for (market) truth.

The others, not so much.

Using Loeb’s tenet, that is, ‘focus’, we’ve taken it and have gone short and continue to go short (not advice, not a recommendation), the biotech sector via LABD.

Summary:

There’s no guarantee the short trade will work out; yielding a significant gain.

Any number of things can happen:

Internet outage, power outage, terrorist attack, supply chain and transportation shut-downs … literally, anything.

However, being short (from a personal standpoint) is better than wringing one’s hands, cowering in fear, looking to the (bought and paid for) financial media to provide direction on what to do in this unstable environment.

Epilogue:

By using the life’s work of Livermore, Wyckoff & Loeb, its been determined, being short biotech (and possibly the mining sector) is the appropriate market stance.

With the caveat that even now, one might need to exit the trade; it still appears at this juncture, the on-going short (not advice, not a recommendation) is the most focused profit opportunity given the current environment.

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.

Silver Short Squeeze, Over

Massive volume in SLV, points to significant reversal.

Not since the week of May 13th, 2011 has there been higher volume.

The week prior in 2011, was the highest volume ever, for SLV at 1.1-Bilion shares.

Those two weeks culminated in a crash over -31% and were just after SLV reached its all-time high.

Total down-draft for the three weeks combined (the top and two weeks following) was nearly -34%.

Will it be any different now?

Probably not.

At this point, it’s important to re-state, this site is following principals and techniques set down by three market masters of the early 1900s; Livermore, Wyckoff and Loeb.

Markets do not change. Using the techniques outlined by those early masters are still applicable today.

Arguably, the father of technical analysis was Wyckoff.

The terms “accumulation, distribution, support and resistance” originated from him.

His technical publications had the largest subscriber base in the States at the time; larger than all other publications combined.

At one point he got so successful, his buy or sell recommendations were beginning to move the markets all on their own. The year was 1918.

Instead of stroking his ego on how ‘his recommendations’ were affecting the markets, he saw it as a disservice to his clients.

In May of 1919, he discontinued his newsletter publication ‘The Trend Letter’. It had become so popular, it was impossible to provide recommendations without those same tips moving the market.

What a contrast to today.

Those attempting garner forces (the little guy) to move the markets, such as silver, will find out soon enough who’s in control … and it’s not them.

It’s unlikely silver is going higher any time soon. There could be some upward spasms as the crowded trade exhausts itself; it’s likely we’ve seen the SLV highs for quite some time.

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.