Real Estate … “Easy Money”

After It’s Over, The Press Will State The Obvious

How many times have you heard after a move is nearly over, the financial press will say:

“Well, the easy money has already been made”?

They kept everybody on the wrong side long enough for the professionals to reap a windfall; then act as if you should have known it all along.

Back in 1992, during the presidential election, I watched as a major financial publication put our report after report how the economy was contracting, getting worse.

Then, after the election was over and the incumbent ousted, that very same publication’s next report stated the economy was not as bad as previously thought.

It was my first hint, something was wrong.

Not until many years later, when I determined (airplane) kerosene burning at 1,800 degrees Fahrenheit, could not melt steel at 3,400 degrees; did it all become very clear. 🙂

First Rodeo?

Not for me as you have probably guessed.

If we’re going to trade/speculate profitably in this (financial collapse environment), we need to be awake.

Wandering around with delusions of P/E ratios dancing in one’s head, is not going to translate to profits.

Which brings us to the following question:

Are we in the ‘easy money’ stage of (shorting) real estate?

Is this coming Monday, going to be a continuation to the downside in earnest?

Let’s take a look at the chart of IYR and see what it says.

Real Estate IYR, Weekly

Technically speaking, IYR is in Wyckoff spring position (poised to move higher).

It penetrated below support and has come back to test.

The Problem Is:

Price action went straight down into support (for three-weeks, at least), penetrated, and has now come back up for a ‘test’.

Is more upside a high probability?

Short answer … No.

Could price go higher from here? Yes, anything can happen but it’s not the likely scenario.

Real Estate, IYR Daily Chart

The daily chart shows we’re still in a trading channel. Friday was/is, a test of the right-side trendline.

The smaller, hourly timeframes had their channel lines penetrated; so, we pull successively farther out (in time) to see if the overall structure has been violated.

Looking at the chart above, the channel is still in-effect.

Trading Activity

The table below, is from one of my firm’s trading spreadsheets (not advice, not a recommendation).

It’s self-explanatory, showing a very busy two weeks.

The original position remains active; with Friday’s close of DRV 46.46, that represents an open gain of, + 40%

The Day Trade on Thursday, the 12th, was an attempt to increase the line. However, as the day progressed it became obvious that a reversal (or sorts) was in the works.

That day’s position was closed along with the one opened on the 11th, for an overall gain of + 3.85%

Next Leg, Lower ?

The position opened this past Friday was in anticipation of the next leg lower.

Note: The finger is always on the sell button in case the coming week shows more IYR, upside.

However, price action of IYR itself, is showing that it’s ‘respecting’ the Fibonacci projections as shown below.

Last week’s action confirmed and bounced off the 100%, projection level.

Putting the channel back in and compressing the chart gives us the following … yikes !!!

Summary

If IYR declines to the 161.8% projection, or even farther, expect there to be plenty of panic.

We should also expect to hear from our ever-helpful financial press when they say:

‘The easy money has already been made’

That of course, would probably be true (stating the obvious) and give us a potential confirmation to exit the position.

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

Herd Behavior … After The Top

Correction, Or Collapse

Structural Damage, SOXX

Even though technical conditions show we’re at least in a correction, if not outright reversal or collapse, record inflows for 2022, vs. 2021, present the herd-driven behavior of the public (and funds), to go long.

According to the link above, flows have been out of bonds and lesser performing equities, into equities that have gone down less.

In addition, you can see some of that flow (not addressed in the article) going into gold and the mining sector.

Stepping Back

Pulling away from charts and indicators for a moment, figuratively closing one’s eyes to get a ‘feel’ for what’s happening, it looks like the following:

We’re in a (potential) massive juggernaut reversal that’s been decades in the making; possibly having origins going all the way back to the ’87, crash, the ’95, bull market and then, repeated bubbles of 2000, ’07, and now.

At this point, it looks like the ‘average investor’ is doing the only thing they know how to do … that is, go long.

Those with at least some market knowledge, just got decisively whacked with their ‘put buying‘ strategy as the market has rallied strongly off the lows.

Pavlovian Panic

We’re witnessing the knee-jerk reactions of a public that’s been conditioned for decades, not to ‘think’, but only ‘do’.

Expect this type of behavior to go parabolic if the markets really do turn lower on a sustained, long-term basis.

Prechter has written extensively about crowds or the herd; especially in his text The Wave Principle of Human Social Behavior.

We can see this visceral behavior real-time, in other seemingly unrelated markets. Two examples below:

First, we had oil futures going negative for the first time in history; then we have LNG tanker rates going negative first time as well.

The model seems to be:

“Everybody wants it, and then, they don’t”.

The crowd runs to and fro, effectively leaderless.

With that said, one can make a case we’re just beginning, or already in an economic collapse; now being followed by the early stages of a market collapse.

Meanwhile, The Elephant Gets Bigger

Let’s not forget the massive elephant that’s just now getting so large, it can’t be ignored (time stamp 2:40).

Recall the example at this link … disparate crowds have a tendency to come to the same decision and modify behavior, all-at-once.

You have to wonder, when that crowd is going to simultaneously press the Sell, button.

Hit, In The SOXX

Unprecedented events are everywhere. That includes the massive, ‘never before seen‘, thrust lower in the SOXX.

The uptrend shown in the weekly chart of SOXX, has been decisively broken and with enormous volume.

The week ending Friday January 28th, saw 16.7-million shares traded … the most ever for the index (ETF).

More detail on trend break

Then, There’s Elliott Wave

Before the ‘Elliotticians’ get miffed by the previous (cookie cutter) comments, here’s this:

When this method works … it’s great.

It provides good projection areas and the useful ‘Fourth Wave of Lesser Degree’, targeting.

Note: A quick internet search for this Fourth Wave method (authored by Prechter) turns up nothing.

Logging onto ‘Club EWI‘, putting in ‘Fourth Wave’ has no items found.

One can try contacting Elliott Wave International, to request a copy of this targeting method. It may still be available (for a price).

The data used by this author to target the 4th wave retrace (shown below), is from a hard copy, dated, 1/8/2003. That information was excerpted from The Elliott Wave Theorist, July 9th, 2002.

First, the 2-Hour chart from Thursday’s update is repeated below with the ‘lesser degree’, added in magenta font:

Getting closer-in on the 4th-wave area below:

It’s subtle and difficult to spot. The price action congestion area is the ‘4th wave of lesser degree’.

Summary:

The previous update showed entry points for what is now SOXS-22-01 (not advice, not a recommendation).

Friday’s price action put this position well in the green; getting it to +24%, based on the close.

The table below are the ETFs being tracked along with the leveraged inverse fund tickers.

The percentage gain/loss, is for this past Friday’s action and shown for the inverse funds.

Obviously, the semiconductors were hit the hardest on Friday and so, SOXS, had the largest gain.

A good stop level for SOXS would naturally be Friday’s low (not advice not a recommendation). If we really are in an Elliott Wave 3, down … price action’s expected to continue its decline with haste.

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

SOXX, Downside Reversal

The Elliott Wave, Connection

A couple of things first.

Number One:

This site does not use Elliott Wave as a primary analysis tool.

However, to be aware of the technique, will at times provide an additional edge … like now.

Number Two:

Once again, gold and the mining sector have become unbearable to watch.

The amount of hysteria, hype and bloviation serves to make this market all about ego. Ego is a four-letter word for the professional speculator/trader.

We’re leaving it alone for now and moving on to the market at hand: Semiconductors (SOXX).

Semiconductors, SOXX

On a Monthly basis, the chart below is the entire trading history for the sector:

The next chart zooms into the area(s) of interest.

This market, the semis, had its most powerful thrust lower in January, for the entire history of the sector.

The following chart is where it gets interesting.

Elliott Wave labeling as shown. If correct, Wave 3, down has just started (not advice, not a recommendation).

Warning:

My former mentor, the late David Weis, who once worked for Prechter, said the approach is a “cookie cutter” (his words) attempt to force the markets into a pre-defined construct.

With that caveat in hand and the understanding the ‘wave’ could fall apart at any time, let’s see what it would project if price action followed the current labeling and structure.

The daily chart shows a Fibonacci projection based on the Elliott Wave labels:

The projections are in percentiles of the first wave distance.

Elliott Wave rules are that ‘Wave 3’ can’t be the shortest wave. If the structure holds, that means Wave 3 (if that’s what we’re in) would go below the 100%, level and potentially to 161.8%, level.

To Trade, or Not To Trade:

This structure was spotted late yesterday … after abandoning the gold sector. There had already been the pre-requisite hype about CPI numbers and such giving the ‘excuse’ for markets to rise.

That meant risk of a short position (yesterday, early today) was low: not advice not a recommendation.

The chart below of leveraged inverse fund SOXS, shows entry points for what is now: SOXS-22-01

Summary:

Taking a cue from the late Dr. Martin Zweig, on his words during this broadcast, he was very hesitant to use the word ‘crash’.

So, this update is hesitant as well.

However, if the forecasted move of SOXX, to the Fibonacci projected 161.8% level (or more) is realized, it’s a decline over – 37%, from current levels.

It would be significant … crash or not.

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.

Natural Gas First: Who’s Next ?

Is it Corn?

So, it begins.

This link to an article where lawmakers (using that term loosely) are attempting to limit the export of natural gas.

We’ve already discussed the likelihood of some type of corn or grain embargo as prices continue higher.

Now, we have a similar (limit export) event but in the energy sector.

Recall, the statement from that prior (corn) post:

“What we’re looking for here, is some kind of Jimmy Carter type stunt where corn exports are halted in the name of ‘national security’ or some such thing.”

And this, from the same post:

“Of course, if that happens, corn is likely to crash (like it did last time) if only temporarily.”

So, let’s take a look at what happened to natural gas (UNG), when our lawmaking geniuses proposed to limit exports.

Daily Chart Natural Gas, UNG:

So, when this type of announcement comes out, the market takes a major hit … just like it’s forecast to do if we get something similar in corn (not advice, not a recommendation).

Now, if the overall long-term objective, is to wipe-out the food supply, wouldn’t you want some kind of dry run to make sure markets are going to respond as expected?

So, let’s try natural gas first, shall we?

Remember that with corn, it will (if it happens) be different.

Because of the elevated fertilizer prices, a forced lowering of the corn market may be all that’s needed to make sure very little-to-no corn gets planted … and Voila!

For a reminder on just what exactly we’re dealing with here, please reference this link.

Moving on to other markets, we have some housekeeping in the gold mining sector.

Junior Miners, GDXJ:

As stated in the pre-market update yesterday, the finger was on the sell trigger.

After the first hour of trade, it was obvious higher prices were in the offing.

Not willing to wait through a correction to a higher retrace level, the short position was closed-out (not advice, not a recommendation).

The table below summarizes the entire round-trip. It should be somewhat self-explanatory.

A hypothetical $10,000 was used as the starting amount. Any additions to the position used margin.

The end result as shown, approximately, +21%, gain.

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, Before The Open

Gold Miners GDXJ, To Close The Gap ?

The magenta arrow and bar show pre-market action in Junior Miners GDXJ, about 25-minutes before the open.

Fibonacci retrace levels as noted.

The zoom chart shows a gap that action may be trying to fill and then? Is there something more?

Sated earlier, a 23.6%, retrace is rare and 38.2%, more common.

Summary:

The market looks to open higher.

If so, typical behavior is to come down for a test and then continue upward if that’s the overriding direction.

If the expected test fails, action may continue lower.

Once again, we’re at the danger point. The action itself defines the trading response.

Friday saw a partial exit of the short JDST-22-01, position in anticipation of higher prices (not advice not a recommendation)

Today may see the rest of the exit if the pivot higher is confirmed (typically within the first hour).

The fact pre-market trading is subdued with just (so far) a half-point or about 1.0% gain, still suggests weakness.

We can see price action penetrated support (bottom blue line) on the chart and so GDXJ, is in ‘spring position’. However, thus far that spring appears to be weak.

There’s a lot going on at this juncture.

JDST-22-01, Position Table to be updated and posted later.

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

‘Unbelievable’ Numbers

Good News Is Bad News. Bad News Is Good News

For all of us serfs in the banana republic proletariat, it’s near if not impossible, to keep up with the lies.

The latest ‘employment‘ report is just one example.

This video from Jerimiah Babe, posted a few days ago has a different story. Check out the intro and then farther on at time stamp: 9:00.

For a second opinion, we can go to Dan, at i-Allegedly.

On his latest post, fast-forward to time stamp 7:00, where he walks through an outdoor restaurant area that’s completely vacant.

The ’employment’ report is vapor. Judging from the comments (at ZeroHedge) most everyone seems to be aware of the fakery.

Naturally, with all of this uncertainty and rampant inflation, the logical place to go would be the gold market.

Junior Miners, GDXJ

As this post is being created (mid-session), the Junior Miners are at the danger point. Price action’s at a location where it’s decision time.

So far, it’s an ‘inside day’. We don’t have a new daily high or low from the previous session.

The Fib retrace of 23.6%, discussed previously is holding for now. That weights action to the downside.

Posting a new daily high would begin to erode the set-up; potentially indicating GDXJ, is going to attempt a retrace to the Fib 38%, level.

If that higher retrace becomes a more favorable probability, the JDST-22-01, trade will likely be closed out (not advice not a recommendation).

The chart below shows the inside action thus far.

The table below has the current positioning JDST-22-01, via inverse fund JDST (not advice, not a recommendation).

As always, the sell finger is on the trigger. Description of color coding and table layout is in this post.

Summary:

Trade decisions posted on this site are defined by the price action itself (not advice, not a recommendation). Wyckoff analysis does not concern itself with what’s obviously fake.

Wyckoff focuses strictly on what the market is saying about itself.

At this juncture, price action’s saying that both bulls and bears, are at the danger point.

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

Junior Miners, Trading Clues

Clues For Entry, Clues For Exit

The last time weekly down-thrust energy (Force-Index) was this deep, GDXJ price action ratcheted lower for 16-weeks before a significant reversal.

That reversal took place at support where GDXJ, is now. However, back then (week of October 1st), contact with support was on weakening Force-Index; this time, it’s increasing.

It’s reasonable to expect an attempt to rally in the coming week … but with this much down force, a successful rally is not the high-probability outcome.

Summary:

One possible clue for exit of short position, JDST-22-01, is to look for continued downside action but with divergent (lessening) thrust energy; 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

It’s The Poo … Turning Into Gold

Wait, What ? … We Really Do Need Cows ?

Unprecedented times, yields unprecedented events.

It looks like cow dung (i.e., fertilizer) is literally turning into gold.

From the October 12th, 2021, update:

“What happens when the public realizes all-at-once, it’s the food supply that’s not ever (in quantity) coming back?”

Of course, in our upside-down world, if dung is turning into gold, well then gold must be turning into, um, something akin to dung; and so, it is.

For those who have been monitoring this site and others like ice age farmer, this news is nothing new.

The assessment that gold (GLD) was in a reversal (up-thrust) test, published hours before the Fed announcement, appears to be correct.

From the mining sector, the Junior Miners (GDXJ) have been hit the hardest being down about – 10.7%, for the week (early session).

Junior Miners, GDXJ:

We’re going to use the weekly close chart of GDXJ, as presented in the January 24th, update; more specifically, this statement:

“If GDXJ really has pivoted more aggressively to the downside, price action will ‘get itself into the channel’ by accelerating sharply lower.”

So, let’s take a look.

GDXJ, Then:

GDXJ Now (early session):

It’s still a long way to go before the close. However, action seems to be accelerating lower into the new more aggressive down-channel.

More detail in the zoom chart below.

Positioning

As a courtesy, although not obligated in any way, the following is from the company’s trade spreadsheet (not advice, not a recommendation).

The ‘share size’ has been changed to indicate percentage of the position.

Frist, we had DUST-21-01, closed out (details discussed here) and then JDST-22-01, opened. We’ll call that initial open as 100%.

Then, additions were made and one reduction before adding again. Those changes are shown as percentages of the original size.

Example: If the original entry on 1/19, was 10,000 shares of JDST, then on 1/20, that amount was increased by 348, shares and so on.

The table below provides the dates and entry/exit prices (not advice, not a recommendation).

Summary:

There may still be opportunity to increase position size.

However, it’s obvious at this point, the market’s in decline and volatility likely to increase all the more.

It’s literally been four months or longer, to plan this trade. As of this post, the combined position is up a nice +31%

The next order of business is to monitor action and locate potential exit targets and stop levels.

Meanwhile, the cow dung becomes ever more valuable. 🙂

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 Miners: Now, It’s Obvious

It Was Never A Bull Market

The bottom’s falling out of the equity markets and the miners are going right along with them.

For long-time users of this site, this lack of a sustainable bull market in the mining indices was identified long ago.

Fifteen months ago, we had the following post. Let’s review and give it an update:

‘What’s wrong with this picture?’

The Charts:

First off, we’ll re-post the weekly close chart of Junior Miners, GDXJ as it was then (October 25th, 2020):

The following quotes were also part of that report:

“One way to look at it is, the junior sector does not believe gold (and silver) prices can be sustained at current levels.”

“Or, if they are sustained, there must be something else at work that would prevent them form obtaining a substantial profit.”

Now we know, nearly a year and a half later, that “something else at work”, is what we call The Speck and the Speck-Effect.

Not only that, energy (and money) that’s being diverted to solve non-problems (covered in the last post) may be having an effect as well.

Let’s not forget supply chain problems with no end in sight.

If there ever was a case for Wyckoff analysis, this is it.

Reading price action, making calculated (intuitive) decisions will keep one away from what by now, has become useless prattle from the mainstream sources.

Remember ‘blue skies ahead’?. Seems like it was almost yesterday … oh, wait. 🙂

This garbage-in, garbage-out, is not exclusive to just the financial media.

As Dr. Vernon Colman points out in his video (linked here), it seems to be pervasive in all types of media world-wide.

Junior Miners GDXJ, At Present:

Here’s how the weekly close of the Junior Miners looks today (approximately, mid-session):

Downside Trading Channel(s)

We’ll stay with the weekly GDXJ but zoom in and mark it up:

GDXJ, has been in a well-established down-channel, beginning around late November of 2020.

As shown with the grey dashed-line, there’s a possibility of a new more aggressive channel.

The chart below shows the potential right-side trend line is currently being ‘straddled’ by price action; this can happen when the equity or index is unsure there’s been a change.

If GDXJ really has pivoted more aggressively to the downside, price action will ‘get itself into the channel’ by accelerating sharply lower.

Where’s It Headed?

For this update, we’re going to use the P&F projections for GDXJ. Fibonacci projections (which have a similar target) may be covered in tomorrow’s update … price action depending:

Downside projection is for a drop of approximately – 35% to -50%, from current levels (not advice, not a recommendation).

Summary:

As always, anything can happen. The markets could be rescued yet one more time.

However, at this juncture we’re at least in the established down channel shown above. Price action will let us know if there’s been a decisive acceleration to the downside (grey dashed-line).

Remaining short GDXJ via JDST; labeled as JDST-22-01 (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

Volatility Event: Newmont Mining

Alignment Of The Bears

“Volatility Is Good”

Volatility cauterizes the emotions. It reveals the market extremes and shows each player’s hand; bulls and bears.

With the market just opened we’re going to look at gold’s last man standing: Newmont Mining.

‘Last man standing’ because, except for two equities far down in Senior Miner’s GDX, no one is anywhere near their mid-November highs.

The take on this: The gold market’s thinning out and ready to reverse.

A really big move

It’s easy to get lost and hypnotized with the day-to-day action. However, by pulling back, one sees the potential for a massive short (the market) opportunity (not advice, not a recommendation).

Implosion Effects: Broker Platforms Go Inoperative

Over and again, nearly each time there’s a big down move in the markets, where the Dow may lose 1,000 points or more, brokerage platforms seize up.

It happens so often; it’s probably best to incorporate it into one’s trading approach.

That’s one of the reasons, if not the main reason to work the short side (not advice, not a recommendation).

Newmont’s Short Clues

The volatility has exposed everybody’s hand on both side of the trade. That’s the good part.

We’ll touch on each technical event separately, starting with the unmarked daily chart:

First off, markets that have wide, high-volume bars, tend to come back and test that bar. We see it below:

Next, price action’s got itself into a terminating wedge; a potential bearish reversal pattern:

Then, we have today as Fibonacci Day 34, from the December 2nd, reversal low.

As this post is being created, NEM just made a new daily high; potentially culminating its wedge terminating move.

Big Fish, Little Hook

As Dr. Elder has said concerning stop placement, ‘You can’t catch a big fish with a little hook’.

So, we have GLD, GDX and GDXJ, in a November bull trap (up-thrust), with what looks like two-months of price action to come back and test.

If that assessment’s correct and it took two months just for a test, whatever happens next, may be on the order of years to resolve itself.

From a trade standpoint, it looks like today’s low in JDST, current open position, JDST-22-01, may be a good place for a stop (not advice, not a recommendation).

Newmont, Reversing

After Newmont posted a new daily high, it’s currently trading below yesterday’s close.

Deflation Pivot-Point

We have the usual hysteria in the gold market but this time, deflationary forces may be overtaking the manic gold bulls.

Case in point:

Existing home sales look like they’re rolling over. All kinds of excuses being made about lack of inventory and the imaginary ‘Speck’ with its new variant.

The one thing not imaginary about The Speck, is this report about what’s really going on.

Massive ‘depopulation’, is deflationary.

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