Bond, Bear Trap … Now ?

TLT, Penetrates Support Early

Looks like bonds (TLT) aren’t wasting any time.

This update proposed we’d get a penetration of support sometime around the upcoming Fed meeting on the 26th of this month.

However, today, TLT price action has moved lower, penetrated support and is resting just below those levels.

Long Bonds (TLT) Weekly

The Weekly chart shows price action hanging just below support levels (blue line).

TLT is at the danger point where risk of going long, is least (not advice, not a recommendation).

My firm has no interest in buying the debt of a bankrupt nation … any nation. So, we’ll stand aside on going long the TLT.

However, we can use this action as a proxy for the overall markets. That is, a strong TLT upside reversal may indicate downward acceleration in the major indices; S&P, Dow, QQQ and on.

Senior Miners, GDX

The daily chart of GDX has posted a new daily low.

This action helps to confirm that GDX remains in the downward trading channel, discussed here and is now continuing to move lower into that channel.

Positioning:

Remaining short GDX via DUST and increasing position size as the market allows (not advice, not a recommendaiton).

Trade identified as DUST-21-01.

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

Pivot – Point: ‘Inflation’

Major Direction Change Ahead ?

Was the inflation report ‘brutal’ or not?

The gold market, the supposed ‘inflation’ safe haven, has already decided for itself.

That is, GLD ‘blips’ higher just 0.26%. Hardly a screaming bull market.

If the worst inflation in 39-years can’t drive the gold market higher, then we’re taking the contrary view.

We may have just seen the peak of whatever’s being termed inflation.

Demand on many if not all fronts (except, maybe food) looks ready to collapse. The consumer’s tapped out; about to be taxed out as well.

Taxed out of whatever is left of their property … even if it’s stolen property.

Buried in this mainstream article may actually be some truth. ‘Supply chain pressures are easing … shipping rates coming down’.

Of course, they won’t tell why it’s happening.

It’s a double whammy of the consumer being maxed-out and literally dropping out as well.

We’re calling the video in the link, The ‘Speck-Effect’.

Let’s move on and take a look at what the gold market has to say about inflation.

Gold (GLD) Daily Chart

Price action is nowhere near a bull move and remains below significant resistance.

In the expanded chart below, we can see GLD literally banging about below the resistance level.

First, a test. Then a secondary test and now, what looks like a third attempt.

Note, that each subsequent test is at a lower high (thus far).

Senior Miners (GDX)

Price action in the miners, GDX is similar to GLD.

GDX remains below significant resistance.

Each upward attempt appears to be terminating at lower and lower levels.

Newmont (NEM) and DUST-21-01

Price action in Newmont (NEM) continues to look as if the entire market is thinning-out.

If there are this many price-action attempts to throw off market participants whether bulls or bears, one gets the sense the ensuing move (if/when it comes), may be literally off the charts.

Maintaining short via DUST-21-01 (not advice, not a recommendation).

Summary

We’ve just had the worse ‘inflation’ news in 39 – 40 years, depending on the source. Yet, the precious metals markets go nowhere. Therefore:

The ‘inflation narrative’ is false.

Just another lie. Probably no surprise there.

If it was true, then all commodities, gold, silver, corn, grains, oil, coffee, every last one of them, would be in a screaming bull market.

Instead, we’ve got the grains moving higher while precious metals move lower.

It can be shown that gold is now inversely correlated to corn as seen, in this post (in case you missed it).

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

Newmont: Fibonacci Count

Reversal Posting Fibonacci Sequence

In what seems to be a surreal exercise, waiting to see what’s going to happen next, Newmont (NEM), is posting Fibonacci counts in its nascent reversal (thus far).

The usual suspects are out on YouTube … touting the next bull move in gold and the miners.

However, the market itself is saying it’s not convinced.

This is another brief update to show Newmont has apparently reversed; posting Fibonacci counts on the initial downswing and what looks to be the upward test.

Newmont (NEM) Daily Chart With Fibonacci Count(s)

It’s up to the market itself to say today was the top of the reversal test … or something else is going on and we may indeed have the gold miners in the beginning stages of a bull move.

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

Short (DUST-21-01) Trade Update

Brief, And To The Point

The 3-Day chart of GDX inverse fund DUST above, has the vertical range compressed to better show the support/resistance boundary.

The boundary is shown close-up in the version below:

Coming back to test a boundary as shown is normal market behavior … there’s nothing (yet) that would indicate the direction of ETF GDX is changing its main direction from down to up … with DUST moving correspondingly lower (not advice, not a recommendation).

However, we’re potentially at another danger point where price action can go either way.

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.

The Danger Point®, trade mark: No. 6,505,279

Gold … $1,300/oz, Or Lower ?

From Stacking, To Panicking

It may go down as the biggest strategic ‘stacking’ blunder ever:

The consumer’s maxed-out, food supply chain’s being systematically destroyed and now, gold’s set to down-draft nearly 20% … just for starters.

For those still thinking it’s all about inflation, how about this personal anecdote (skip to Analysis, Gold (GLD), if not interested).

Anecdote:

A recent trip to the local Ford dealer to obtain an engine part, specifically, a “Camshaft Synchronizer”, i.e., what used to be called a ‘distributor’, a very common part, resulted in this conversation.

Ford: ‘Ok, part number F8DZ-12A362-AA.

Don’t have it. It’s on back-order. We’ve got an order for 347 units, with no ETA‘.

This part’s used on V-6 production engines going back decades. It happens to be a weak point in the design. When it goes out, the engine quits.

With literally millions of these engines on the road, how can there be no repair parts available?

None of the retail dealers in town had one either; not AutoZone, not O’Reilly’s, nobody.

Another Ford dealer located 50-miles away, had one unit and so the order was able to be filled.

If your car/truck is dead-in-the-water, how much would you be willing to pay to get it back on the road?

Imagine if there’s some gearhead Bubba out there who’s stockpiled a thousand of these things … how much could he charge for them?

Now, that’s what I call ‘Stacking’. 🙂

Controlled demolition of the supply chain: Not inflation.

Which brings us back to gold (GLD).

Analysis, Gold (GLD)

Weekly chart of GLD below and then inverted.

Inverted with projection.

Old Time Projection Method: The P&F Chart

Since it was Wyckoff analysis that helped us plan and spot the gold reversal, we’ll use a method equally as old to project where GLD could go (not advice, not a recommendation).

The P&F Chart.

Using the two methods above, we’ve got a combined projection in the range from GLD: 119 – 140; a decline in the vicinity of: -16.50%, to -28.96%

Is anyone even remotely prepared for this?

Important Caveat

There’s been no wedge breakout … yet. So, the projection’s a little ahead of itself.

What we do have, is a miner’s market that doesn’t look like it’s waiting around for gold.

For the miners, other factors could be coming into play; not the least of which is massive corporate stupidity.

Remember this post?

If your management’s focused on solving problems that aren’t even real … how can they ever hope to run a complicated and dangerous mining business?

Gold Steady, Miners Down

Yet another scenario, is that gold could remain steady or even rise and yet the miner’s collapse.

How can that be?

Let’s remember where a good chunk of gold is being produced: Australia and Canada.

We’re not going to get into what’s going on in these two countries except to say, they’re not exactly outfitting themselves for continued sucess: quite the opposite.

How long will it be before we hear about mines being shut down as a result of staffing shortages.

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

Trade Anatomy

Leg Bone Connected To The Knee Bone …

If you can’t draw your trade system on one side of a paper napkin, it’s too complicated.

Just to be clear, ‘simple’, does not mean ‘easy’.

What’s presented on this site and essentially in real time, is a particular method of approaching and trading the market (not advice, not a recommendation) using a culmination of research and education (i.e. losses) that span the course of over thirty years …’thirty-five’, to be exact. 🙂

That culmination has resulted in the following ‘system’.

Being from the engineering field, it’s probably no accident that system takes the form of a ‘checklist’.

However, make no mistake. The checklist is about as far as engineering can go. The rest (reading price action) is mostly art and intuition.

The System:

  1. The Set-Up 
  2. The ‘test’ or ‘gut-check’
  3. The first ‘correction’
  4. Continuation or Failure
    1. Trend identification
    2. Potential channel(s)
  5. Exit process
    1. Scale out
    2. Full exit
  6. Post trade evaluation

Let’s take a look at how that system’s applied to the current (open) trade: DUST-21-01.

Since we’re short the Senior Miners GDX (not advice, not a recommendation), we’re going to use the daily chart but invert it (to approximate DUST) as shown below:

Marking up the chart with the above ‘checklist’ reveals the following:

As this post is being created, GDX is collapsing through support levels while DUST screams higher.

In the past two days, unless price action was monitored minute by minute, there was no time to get aboard comfortably (i.e., with low risk).

This plays directly into “Turkey’s” admonition a century ago about ‘not losing your position’.

The First Correction: Complete

With that under our belts, it’s time to get to work identifying trendlines, channels or potential traps for either the bulls or bears.

As a starting point, the daily chart of GDX is compressed and marked up with past trendlines and a potential line (magenta).

Looking closer

This series of trendlines is rising (using inverse fund DUST) at approximately +725%, annualized.

We can also see from the zoom area; price action can go sideways for some time before contacting the trend to either verify or negate.

Using DUST as the proxy, that sideways action can be as long as fifteen trading days. Just long enough to discourage the late comers; bulls and bears alike.

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

Dominoes … Begin To Fall

Juggernaut Set In Motion


This just out from Activist Post, shows we’re in yet another ‘never before seen’ event.

One of the references in the article can be found at this link.

Many times on this site, the ‘reduction in size’ has been discussed.

Now, the official numbers are starting to show-up. The bottom line? Retail demand is going to evaporate.

As a side note, it’s interesting that YouTube now has videos on how to spot Myocarditis …. something we’ve (in the serfdom) have never heard of … until now.

While everyone seems to be focused on the overall markets, S&P, Dow, and QQQ, underneath the radar, gold and the miners continue to rachet themselves lower.

Senior Miners, GDX & Inverse DUST

The 2-Hour chart of inverse fund DUST shows we’re still at the danger point discussed yesterday.

The zoom chart (below) has an interesting distinction.

The distance between the blue-line trading range and the magenta-line trading range, is the same. The black-dashed arrow is equal length.

This implies that yesterday’s move, along with today’s may be an ‘a-b-c’ correction. A counter-trend move.

If so, the main direction has changed from down to up (for DUST).

Summary:

Still at the danger point, we remain short this sector (not advice, not a recommendation).

The good part, if price action reverses in DUST and begins to pressure the most recent lows, it’s an indication something else is afoot and the trade is failing.

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’s ‘Last Chance Saloon’

If This Move Fails, It’s Over

Gold bulls are doing everything they can to re-establish the up-trend.

This morning’s action was a deep upward test of miners GDX, and not as deep for gold itself (GLD).

The bulls were able to open higher in both GLD and GDX; then driving action upward into an early morning test.

At this juncture (mid-session) that test is wavering.

We’re going to inverse fund DUST, on the 2-Hour basis to show the fight that’s taking place.

GDX Leveraged Inverse DUST:

Un-marked 2-Hour chart

Adding the notes.

With Zoom.

As this update is being posted, it’s still unknown which direction DUST is headed; currently trading at DUST 19.35.

Summary:

We’re at the danger point where action can go either way.

If the gold bulls can’t hold and DUST makes a new daily high (GDX, new low), we have a decent confirmation, we’re at the end of ‘the first correction.’

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 Bulls … What Happened ?

Last Week, It All Looked So Good

Dazed and confused has got to be the current state of the gold bulls.

Just when things look like they’re getting underway to the upside, there’s another whack lower.

This morning’s action was no exception.

Before anyone starts screaming “manipulation”, the potential for this reversal (i.e., ‘the first correction’) has been discussed on this site for weeks.

Just yesterday was this:

However, the most likely outcome at this point, is the market pivots straightaway or hesitates for several days; just long enough for both sides (bulls/bears) to start scratching their heads.

Well, “straightaway”, it is.

Yesterday’s update, also ended with this:

“Next up, scheduled for tomorrow and depending on price action, we’ll discuss how the upward retrace in GLD, may actually be a test of the mid-November up-thrust“.

And a test it is … bringing us to the chart at hand, GLD

Gold, (GLD) Daily Chart

The un-marked chart.

We’re going to keep the chart ‘as-is’ this time and not invert.

Mark-ups are added showing the extent of the set-up; that last Friday, including Sunday’s overnight futures, were a test of the up-thrust:

It’s A Big Move

We’re looking at price action that took over four months to create a set-up (mid-November up-thrust).

Then, price action posted for nearly two weeks within the set-up before collapsing on November 22nd, last year.

Remember there was absolutely insane gold bull hysteria during that time … a very important nuance.

Now, we’ve got what looks to be nearly six weeks of testing that culminated last Friday (and Sunday, overnight).

If that weren’t enough, over those six weeks, the Senior Miners, GDX, has thinned-out. Thinning-out typically occurs at the very last stages of a directional move.

Summary:

As stated yesterday, if we got a downside pivot in GDX (DUST moving higher), the market may allow an opportunity to re-establish the original position size … maybe more.

At this juncture (mid-session), it’s doing just that.

Early this session, the DUST position was increased by about 3.2% (not advice, not a recommendation).

Channels & Trendlines:

Scheduled for tomorrow, is a discussion on what to expect on a go forward basis.

Will action confirm a potential right-side trend or begin to move deeper into the trading channel identified in a previous post.

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

Fibonacci Fingerprint

Senior Miners GDX

With mixed signals, confusion in the economy and markets, one has to wonder if anybody’s noticed the Fibonacci sequence in Senior Miners, GDX?

As soon as such things get ‘figured out’, time correlations diffuse and evaporate; just long enough to throw off attention and re-emerge at some distant date.

However, as yesterday’s update inferred, along with a compelling trading channel, it begs the question; is this juggernaut so big that even if it’s ‘discovered’, it won’t make a difference?

Of course, the market itself is the final arbiter.

However, the coming week may prove to be interesting. If the time correlation remains intact, expectations (shown below) are for GDX to pivot lower early in the week.

Senior Miners: GDX

We’ll start with the un-market daily chart of GDX and then invert (to approximate DUST) for the subsequent analysis.

Now, inverted

The first Fibonacci sequence, ‘Day 1 – Day 34’, defines the channel width (shown in this update) and the subsequent retrace to the December 15th, apex/reversal; Day 55.

The next chart shows that embedded within the sequence above, is another sequence; from the November 16th low, (inverted chart) to the same December 15th, top.

Putting both together, we have the following.

However, that’s not all.

The time to retrace from December 15th to Friday’s close is/was 12-days … just one day short of a Fibonacci 13.

Is the market going to ‘blip’ this Monday, print a new low (on the inverted) just to make it absolutely perfect or is the whole set-up going to fall apart?

Either one can happen.

However, the most likely outcome at this point, is the market pivots straightaway or hesitates for several days; just long enough for both sides (bulls/bears) to start scratching their heads.

Summary

We’re still short this sector, identified as trade number DUST-21-01, (not advice not a recommendation) but the actual position size has been reduced.

‘Reduced’ is not the same as ‘closed’.

The reduction in size, which was about 8.8%, of the total position, was entirely the result of maintaining margin requirements.

If the trade falls apart, obviously the correct action would be to close.

However, if GDX pivots to the downside (as expected), there may be a window of time allowing position size to be increased back to the original or more if the market allows (not advice, not a recommendation).

Gold (GLD): Testing The Up-Thrust

Next up, scheduled for tomorrow and depending on price action, we’ll discuss how the upward retrace in GLD, may actually be a test of the mid-November up-thrust.

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