Category Archives: Positions

Real Estate: Downside Targets

February 27, 2021 By in DRV, IYR, Jerimiah Babe, Positions, Real Estate, Van Metre

IYR has reversed with a decisive ‘outside-down’ week.

This sector has likely seen its highs for the year and probably its all-time (recovery) highs.

The latest news from Steven Van Metre does not paint a good picture for the economy or the markets (bonds excepted).

Jerimiah Babe (J.B.) has also posted an update on Los Angeles. It’s a human and economic tragedy. Unfortunately, this is where the Cadillac has gone off the cliff.

We’ve continually held to the stance, there’s no recovery.

The “recovery”, is a mainstream narrative intended to keep the herd focused in the wrong direction and on the wrong things.

Judging by the hysteria with small cap short squeezes, physical silver and bitcoin (kind of hard to access when the power goes out), the promulgator to the proletariat, the mainstream media, has done an excellent job.

In fact, that is their job.

Interest rates might only need to stay elevated for a short while (a few weeks) to completely choke off any semblance of economic activity.

After that, collapse is likely to feed on itself. Even if rates eventually go back lower, it’ll be too late. The juggernaut has been set in motion.

This week had IYR posting outside-down. That in turn, added a print to the P&F chart which helped to complete a downside forecast.

Reaching the target levels puts IYR below all recent support. That support would then become resistance for any upside counter-trend action.

Ultimately, we’re looking for IYR to go below 2009, lows.

If that happens, it could take months or years. P&F charts are independent of time. They only show potential.

As provided in earlier updates, my firm is positioned heavily short IYR via DRV (not advice, not a recommendation).

From here and depending on market action, the plan is to increase that short until volatility prevents further, low risk entries.

As always, anything can happen and next week could be a miracle reversal. If so, we’ll assess price action at that 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.

Bonds: A Closer Look

February 14, 2021 By in Bonds, HYG, Positions, TLT, TMF 1 Comment

The last report on bonds said to expect fireworks soon.

Price action has the final say. It’s saying not yet but close.

The weekly chart of TLT shows the area we’re going to look at a bit closer.

The chart has been expanded below:

In the past six weeks, there have been three decisive down weeks.

The black arrows on those weeks show each successive down week has less net travel.

Last week was the shortest net travel of the three. In addition, that week had higher volume than the week prior.

Less range, more volume.

The late David Weis in his Wykoff analysis video (link here) discussed a similar situation using Apache Oil (APA).

The short version of the story is: Less range, more volume … ‘somebody’s buying’.

Although not really a bond fan, the opportunity is there. Risk has been or is being removed (never entirely) and one way to participate in a reversal and bull move is using leveraged funds (not advice, not a recommendation).

This past Friday, I positioned the firm in TMF, a 3X leveraged bond fund.

Volume (liquidity) is acceptable at around 600,000 – 800,000 shares daily (allowing pre-market entries/exits).

It’s important to note, while TLT was making new daily lows, the high yield HYG, ticked just 0.01-point above its post recovery high. Since August of last year, TLT and HYG have been inversely correlated.

On way to read this, we’re at extremes.

We’re just one ‘incident’ away from sending things violently in the opposite direction; complete with down-gaps, trading halts, brokerage lock-ups … the whole nine yards.

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.

Fuel & Trucking Disruption

January 23, 2021 By in DUG, Positions, The Speck, XOP

That’s what can be expected from the Moving Forward Act.

Before we get started with any chart analysis, it’s important to note in the link above, submittal date for the bill was June 11, 2020; a full six months before ‘inauguration’.

Like the CARES Act (Speck relief bill) was submitted nine months before there was an outbreak in the far east, (the ‘relief’ bill was in the works for years), the Moving Forward Act was already making its way through committee long before the change in administration.

Just a short digression on CARES. Accessing the link above, one finds the original submittal date (January 2019, nine months before the outbreak) is nowhere to be found. History being scrubbed and re-written in real time.

Systematic destruction of the nation’s infrastructure is the plan; but the real target remains the food supply.

How does this knowledge help with Oil & Gas Sector analysis?

Supply disruptions could cause fuel prices (USO as proxy) to go higher while at the same time, drillers and producers go lower (XOP as proxy).

XOP chart analysis identified a potential set-up in this report.

That has proved correct thus far. Knowledge of the overall plan (supply disruption/destruction) lets us know the sector most likely is not coming back … not anytime soon.

Shorting XOP via DUG (not advice, not a recommendation) by repeatedly entering and exiting as required, could be a go-forward plan for months or years to come.

Looking at inverse fund DUG, the entry is shown. Price action retreated (testing) for two trading days before continuing on with its reversal.

It’s early in the move but there’s a potential trend line.

For inverse funds, trends in the hundreds or thousands of percent (annualized) are not unusual.

If the trend is maintained, a 100% gain on the position would occur right about the middle of April.

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.

GDX Reversing, As We Speak

January 21, 2021 By in DRV, GDX, GOLD, IYR, Positions

If GDX price action continues lower, it may have completed its test forecasted three-days ago.

The gold market is a very crowded trade. At this point, one to be avoided (not advice, not a recommendation).

If GDX posts a new daily low (below 35.40), it would give extra weight, the test is complete.

At the minimum, price action has recognized the bear flag by coming back up to test and then pulling away.

That alone, should give the gold bulls some pause.

In other markets, real estate IYR, did exactly as forecast. It opened below yesterday’s close and retreated from there.

The upward test, also discussed in this morning’s update may have already happened; there’s a 38% retrace present on 30-minute or shorter time-frames.

Correspondingly, the DRV position has been increased (not advice, not a recommendation). At this point we have an absolute hard stop: Yesterday’s DRV low, @ 9.67.

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.

Ancient Art: Point & Figure

January 15, 2021 By in DRV, IYR, Positions, Real Estate 1 Comment

You don’t hear about Pont & Figure anymore. P&F looks old, stodgy and boring; but that’s exactly how one should approach the markets to be consistently profitable.

Paraphrasing Dr. Elder from ‘Come Into My Trading Room‘, he says:

‘Trading is an old man’s game; you need to have a good, long memory.’

Well, the author of these updates is certainly old … well into his sixties and with a long memory; The crash of ’87, debt wipeout of ’98, tech bubble crash of 2000, the 2008 meltdown and now, today.

Those advanced years tempers one’s desire to constantly jump in and out on the swings. Not to say that might need to be the method at the time; but like Van Metre’s approach, the big money’s in the big move.

The jobs data released yesterday basically tells us ‘The economy ain’t coming back’ … possibly ever, in our lifetimes.

We’re at an order of magnitude greater than 1929; it was thirty years before that market returned to its prior levels.

Which brings us back to real estate and IYR. The P&F chart shows us, if there’s a breakout to the downside, initial projection of the move is to support around 69 – 73.

Keep in mind that if (or as) price action passes down through the low 80’s, it then builds up another area of congestion projecting even lower. The initial breakdown would only be the start of downside potential.

With that in mind, the firm is in position (not advice, not a recommendation) using DRV as the trade vehicle. Stop level is in the vicinity of yesterday’s DRV low @ 10.38.

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.

Good Short, Bad Short

January 13, 2021 By in Bonds, Dollar, DRV, IYR, Positions, TSLA

Seems like Tesla (TSLA) is always in the news.

Now, we have ‘the big short’, as reported by The Money GPS, doubling down on a possible even bigger short.

Is TSLA a good short opportunity or just a high visibility gamble; or maybe at this point in our history, just another psy-op?

How many minions are flagellating themselves over TSLA, anyway?

From a trading standpoint, TLSA could reverse from here. It could also gap higher into a wedge throw-over. With the weekly MACD showing no signs of erosion, probabilities are about equal.

Bad Short

Now, let’s look at another chart:

Real estate, IYR is showing classic signs it’s about ready to roll over.

Its been struggling for months at the 85-86 area and just yesterday, posted a new weekly low.

Yesterday as well, bonds reversed to the upside. Pre-market activity points to a higher open … solidifying the reversal.

On top of that, the dollar shows a higher open having (downward) tested its up-trend at the last session.

The list can go on but we see the difference.

One is a gamble (or even a psy-op manipulation of followers) and the other is a trade with high probabilities.

Good Short

The table below has current positioning (not advice, not a recommendation):

Special Update: 9:52 a.m. EST. Price action in DRV pushed to stop level and has recovered quickly.

Position is being maintained (for now) with analysis to follow.

Update: 2:21 p.m. EST. IYR looks to be headed to a 38% retrace at approx 84.25, level. All DRV positions exited. Will look to re-enter shorts at higher level, price action depending.

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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.

Real Estate: Sleepy & Quiet

January 12, 2021 By in DRV, IYR, Positions

At least that’s the way it looks right now.

Under the radar, the sector (IYR) may be getting ready for a dramatic break lower.

The chart above is the 3X inverse fund DRV (inverse of IYR).

The table shows entries over the past few days; not advice, not a recommendation. Currently, the firm has no other open positions.

Early in this morning’s session, IYR posted a new daily low with DRV conversely, posting a new daily high.

At this juncture (11:23 a.m. EST), we’re in a very tight range (both tickers, IYR, DRV) that’s oscillating in an attempt to determine the direction of least resistance.

From a weekly momentum standpoint, MACD has been positing lower for two weeks and is near a zero crossing.

With that, we’re favoring the downside for IYR and upside for DRV.

The market’s hovering at all time highs … effectively masking the fact, air is going out of IYR.

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.

Dollar Up, Market Down?

January 11, 2021 By in Dollar, Positions, UUP

The dollar has been inversely correlated since March of last year.

A reversal was identified in this report which thus far, has proved correct.

Bonds are also showing higher in the pre-market, having met a measured move (wedge) target last week.

The UUP, weekly close has price action slowing its decline, stopping and then reversing. That’s where we are now.

Weekly MACD ticked up (slightly) last week and higher open this morning, would confirm the divergence.

Market sentiment readings as reported by J. Bravo (time stamp 1:00) are literally, off the charts.

On top of that, internet scuttlebutt over the weekend shows at this juncture, absolutely anything can happen.

Having a market stance (or position) that includes possibility of power outages, banks going off-line, internet disruptions and general overall chaos, would seem to be reasonable.

In line with that, entries were made in DRV last week as shown (not advice, not a recommendation):

Pre-market activity for IYR, points to a lower open, DRV higher.

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.

Failed Moves

January 6, 2021 By in DUG, Positions, XOP

There’s nothing more dramatic and profitable than a failed move.

The controlling party, bulls or bears push the market in their direction; only to find out, there’re out of fuel.

The opposing side has been gathering forces to mount an offensive.

Perhaps the most famous ‘gathering of forces’ was the failure of Long Term Capital Management.

If memory serves correctly, it was Goldman Sachs that found out LTCM was over leveraged and overextended.

They used that data for their benefit.

That’s not to say the failed move in the Oil & Gas Exploration (XOP) market is anywhere near the LTCM level.  Just saying, markets are fractal and failed moves occur on all time frames.

The daily chart of XOP shows the failed attempt to break above resistance. 

Price action was swift in the early session; then stalled at mid-day and retreated quickly into the close.

That retreat brought price below resistance … indicating significant weakness.

The short position in biotech (via BIS) was profitable but it did not have the potential for swift action like shorting XOP.

Since the firm follows the tenets of Gerald M. Loeb (late Vice Chairman of E.F. Hutton), we do not diversify.

Trades are focused on specific price action; therefore, tend to be concentrated only in one or two markets at any time.

We know from a fundamental standpoint, there’s no (or very little) demand for oil and the by-products.  Steven Van Metre has contacts in the field that are feeding him information on what’s really going on.

While some of the minions that watch his updates complain about the colors of his moving averages, we’re more interested in the anecdotal data such as ‘oil inventories are piling up’.

Even better was the comment (a few weeks back) that EIA data is not telling the whole story.  There’s even more oil than what’s in the report.

That’s our backdrop for shorting the XOP by using DUG.  Not advice, not a recommendation.

Recall that DUG, with regards to the firm’s broker, has stated “not marginable” indicating especially high volatility.

Open positions are below:

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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.

Real Estate, Ready?

January 5, 2021 By in BIS, DRV, IBB, IYR, LABD, Positions

The real estate index IYR has been struggleing at resistance for months.  Yesterday’s action was a swift break lower to the bottom of the range.

Inverse fund DRV (3X inverse IYR) had is largest single day gain since mid-May of last year.

The weekly chart shows the four-month struggle at resistance as well as MACD bearish divergence.

IYR may attempt to test slightly higher (DRV down) during this session.

If so, we’ll be looking to position short via DRV; not advice not a recommendation.

Moving on to biotech.  Yesterday’s action was a good example of negative bias in LABD.  Even though IBB closed lower, LABD closed lower as well.

The LABD position was closed out as shown (above) and the BIS positions maintained.

Note the R-Exit value.

This represents the gain on the amount risked. If $1,000 was risked on the trade, it returned $8,540.

Update will be forthcoming if/when a DRV position is established.

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.