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.
Media analysts and YouTubers alike, are scratching their collective coneheads.
They’re asking; why is silver down a whopping – 39%, from its print high of February 1st, this year?
If we factor in the high of SLV 48.35 (from April of 2011), silver’s been pummeled – 65%.
With the ‘rampant’ inflation and never-ending money printing, silver (along with gold) should, there’s that word ‘should’, be skyrocketing higher.
It’s an apparent mystery; steeped with smoke-filled back rooms and intrigue.
The ‘Inflation’ Narrative
Let’s help unravel silver’s decline by taking a look at some of the facts.
First up, is ‘inflation’.
The inflation narrative is false. There; glad we got that out of the way. 🙂
How do we know?
We know it’s false because the price action itself, tells us it’s false.
It’s obvious at this point, what we have is supply destruction and not inflation.
The Economic ‘Connection’
Next up, is the economy.
Silver along with copper are industrial metals. They follow the economy … more so with copper. Copper futures are down – 32.5%, from their March 7th, highs.
Coper’s industrial uses are linked here. Nearly half of copper production is for building and construction.
Since the largest real estate bubble in world history has just popped, copper demand is essentially going to collapse.
If at this early stage of Great Depression 2.0, the average person can’t pay the phone bill, where are they going to get any money to drive precious metals demand higher?
Moving on to ‘truth’, we have price action.
Silver SLV, Weekly Close
The chart below has SLV, penetrating one support level (upper blue line) and just now, at the next support.
Since gold (GLD) is in position for an upward test of its wedge breakdown (chart not shown), it’s reasonable to expect another bounce off support for silver.
Using the ‘rule of alternation’, we already had a brief move off the first support level before reversing.
The next contact at lower support, will likely bounce for longer or not at all.
If silver can’t go higher … look out below.
Silver SLV, To Single Digits?
The economic depression is just getting started and industrial metals demand is already collapsing.
Although a data point of one, the following is significant.
Supporting the ‘depression’ assessment is this link; specifically, time stamp 3:20, with a recent graph of housing listings in California … going vertical.
SLV, is in position to test higher; thus, confirming the wedge pattern (grey lines) shown below.
Added to that pattern is a measured move target should SLV, break down to lower levels after an upward test.
There it is: ‘Mystery’ solved.
Silver is heading lower because price action said it would.
Now, the fundamentals are kicking in to add a potential mass acceleration to the decline.
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.
‘Sometimes it seems as if the market hangs in the balance by the weight of a feather.’: Wyckoff, circa 1910.
Is this the big reversal to the downside?
Before we get to that answer, let’s review two recent market pivots (including today).
A Day To Remember
Back on May 4th, the post with the same title, linked here, was to be used for reference on a go-forward basis.
The post has a linked article, whose comment section could be surmised as the bourgeois rebuke of a 78-year-old fund manager.
That manager was quoted as saying, “It’s the biggest bear market of my life”; to which the younger crowd responded with derision, effectively saying the old man’s a dolt, an idiot, a doofus and needs to retire.
Now that time has passed, let’s remind ourselves when the quote was published with the daily (IYR) chart below.
Not only did IYR, not close higher after that, it never printed higher either. It was the top of the pivot reversal, to the day.
The 23.6%, Retrace
Then we have this report just days ago, showing IYR’s price action coming back to a (very weak) Fibonacci 23.6%, retrace.
The daily chart repeated below, showed the ‘risk’ on a short position as approximately 1.04-pts (not advice, not a recommendation).
Risk Narrows Even More
As a result of today’s new daily low and lower close, one can (theoretically) reduce the risk of a short position even further (not advice, not a recommendation).
The risk is now defined as the distance between today’s close (IYR: 93.32) and Friday’s high of IYR: 93.96
A subsequent push above Friday’s high negates the short and would likely indicate a potential move to a 38.2%, retrace.
Subtleties of The Market
A lower daily print and marginally lower close (IYR down just – 0.39-pts.) does not look like anything of consequence.
Could we be right in the middle of a historic crash and not even know it?
Of course, it’s never for sure, until it’s over.
However, if shorting opportunities are being spotted, entered, and managed correctly, probabilities are that one will already be positioned short when ‘the big one’ hits.
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
Active: Positioned short via SRS (SRS-22-01), with stop at SRS: 16.38
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.
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.
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.
That’s the assessment from agents in the field on the imminent real estate implosion.
Interest rates have risen dramatically, applications have evaporated, properties not moving as before, prices are dropping, lenders deploying the last resort; Adjustable-Rate Mortgages (ARM).
When the ARMs, show up in force, it’s over.
Technical & Fundamental
Over the past several days, the real estate situation has been assessed from both a technical (chart) perspective as well as the fundamentals.
The bottom line (below), is so long, it may have to be covered in several posts.
On a weekly and daily close basis, IYR has contacted underside resistance.
On a weekly and daily close basis, IYR has contacted the right side of a downward trading channel.
Multiple gap-fills at IYR, 91 and 94. Volume declines over – 22.5%, on the second gap-fill.
Multiple rising wedge breaks on multiple time-frames signal a potential drop of – 41.5%, from current levels.
Trading volume contracting (as price is rising) on multiple time frames, indicates potential lack of trader commitment to higher prices.
Financial press gets in the game (with several reports), saying ‘now is the time to buy’.
As highlighted above, once the Adjustable Rates dominate, the top is in.
This top may be far worse than ’07 – ’08, as debt levels are much higher, consumer is tapped-out and there is a massive ‘elephant’.
That elephant is now going mainstream with the resultant effect of unprecedented population decline/disablement.
So, let’s get started.
Real Estate IYR, Weekly Close
Un-marked chart.
Test of underside resistance
Zoom of underside contact.
Right side trendline.
Zoom of contact points.
Trading Channel
Wedge Break: Daily Chart
Zoom of break and test
Wedge Break: Weekly Chart
Note:
A measured move to 55-area, gets IYR, back to 2020 lows. That’s a reasonable expectation for an initial leg down.
If we use Prechter’s assessment concerning bubbles (manias), price action eventually retraces every bit (sometimes more) of the entire bubble move.
That puts the ultimate destination of IYR, somewhere in the vicinity of 14.0, or lower, representing a decline of – 88%.
It was going to be $3,000/oz., in months, not years.
Gold-O-Mania was coming. You could even sign up and pay money to read the group-think of the imminent launch.
Well, obviously at this point, $3,000/oz., is nowhere in sight.
Gold (GLD) is even lower now than it was then. On top of that, the ‘changing of hands’ assessment has not been negated; prices continue to grind lower.
Having the financial press cheerlead at the exact wrong time, is an (almost) necessary component to identify a lasting reversal.
As we can see here and here, the financial media’s position is, we’re heading higher. There is ‘real buying’ (whatever that is) for the first time in weeks.
However, from the chart evidence presented above (and we didn’t even get to ‘gap-fills’, ‘multiple wedges’, ‘contracting volume’ … maybe later), it’s hard to present that price action will somehow move significantly higher.
Price action behavior above, appears to point to an immediate or very near-term downside reversal.
Summary
Lastly, we have this from Activist Post: Real estate housing crash in progress.
Be careful. If you read the article, can you see the ruse?
It’s been discussed before on this site. That is, the real purpose of the Fed.
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.
Does it really matter if IYR’s channel is at -99%, or -93.5%?
The sector’s going down fast; that’s the important part.
Unless there’s some kind of decisive, high-volume break to the upside, we’ve got IYR in a confirmed trading channel, declining at approximately – 93.5%, on an annualized basis.
The morning gap open in IYR, was higher as expected; sated in the pre-market report.
However, instead of reaching the 100%, ‘a-b-c’ target, where wave ‘a’ would be equal to wave ‘c’ (a common occurrence), the gap higher only reached a 61.8% target: indicating significant weakness.
The daily chart, has the situation as of 11:30 a.m., EST
Real Estate IYR, Daily
One thing that’s not happened yet … there is no new daily low for IYR.
It has not posted below yesterday’s low of 93.70.
That’s about the only factor that remains as potential upside for the sector.
If yesterday’s low is penetrated, then it weights probability significantly to the downside (not advice, not a recommendation).
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.
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.
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.
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.
Is the objective to create as many news stories (fake or not), along with incessant and contradicting market analysis with the objective: Shut down and distract even the most disciplined trading professional?
The market’s going up, it’s going to crash, it’s in a short squeeze, Goldman ‘says’, then ‘says not’ and on it goes.
If memory serves, the propaganda during the 2007 – 2008 meltdown, wasn’t nearly this bad. Of course, that was before the Smith-Mundt act was repealed … but I, digress.
There are even a few unfortunate dolts that don’t’ even know anything’s happening at all.
Take a look at Dan’s (i-Allegedly) latest video here.
He talks about the number of people contacting him to say ‘it’s not that bad’, or ‘real estate’s going much higher’, or ‘whatever’ as Dan likes to say.
He does present from the (ethical) sales professionals a recognition, real estate’s ‘finished’ for this go-round.
Even while we get reports like this one, where sentiment is so bad, a rally is imminent, the trading objective must be to remain focused on the data … price bars and volume.
That’s what we’re going to do as outlined below.
Real Estate IYR, Daily Chart
The un-marked chart.
Now, let’s get to the ‘force’ behind the rebound of the past four trading days.
The tiny blip circled, was all there was for upward energy from yesterday’s move.
Price action inched up just over 1%.
Looking at the situation from a trading channel standpoint, we see yesterday’s action got just outside the well-established trend lines.
So, we have a little ‘blip’ outside the trendline on minimal volume and force.
The news story linked above (repeated here) says a ‘short squeeze’ is imminent … at least for the tech stocks.
What about the rest of the market? Is real estate going to breakout as well?
That actual (IYR) data says, anything can happen; however, with such anemic upside performance, the expectation is for IYR, to resume its downward trend.
Positioning
It’s about forty-minutes before the open and we already have DRV, pre-market activity.
Because the (bid/ask) spreads are so wide in both IYR inverse funds SRS, and DRV, pre-market activity is rare.
Nonetheless, 3X inverse DRV, is trading higher at +0.79 points or +1.71%, indicating that IYR will have a lower open.
That means, the DRV low of yesterday (DRV 45.64) would make a good stop location for any positioning (not advice, not a recommendation).
Summary
Wyckoff analysis is independent of the news or the financials. He discovered as early as 1902, that prices are moving from a ‘force of their own’ having nothing to do with fundamentals.
The action itself will point to the next likely outcome.
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.
