Economic Free-Fall

Anecdotal Data, Says Implosion

As we speak, economic activity is shutting down … fast.

Amazon shipments cancelled, gas stations going dry, banks halt lending, real estate sales collapse.

Meanwhile, the market’s in a short-squeeze.

What happens next?

We’ll discuss real estate and biotech farther down but first the data sources.

Dan from i-Allegedly reports here, he still has a couple of rubes (my word) that think the market just bottomed out.

Good luck with that.

As we’ll show below, the real estate bear market (IYR) rebound, was identified ahead of time.

Next, we have Red Hurricane describing one semi-trailer load after another being cancelled. He hauls for Amazon.

Shipping activity’s contracting, seemingly, by the minute.

Lastly, this link where the D-word, ‘Depression’ is used within the first one-minute, twenty seconds.

Bottom-out in the stock market? Probably not.

So, let’s take a look at real estate IYR, and see where it might go next.

Real Estate IYR, Weekly Chart

The last update (link, here) showed potential to rise into a test of resistance. That’s exactly what happened.

Back then:

And now:

With zoom

Obviously, the upward test happened much quicker than anticipated … but it was anticipated … no surprise.

Real estate got itself into Wyckoff spring position; so, a rebound (test) is normal market behavior … short-squeeze or not.

If it was a squeeze and if it’s over, we can expect an immediate drop in price action. We’ll analyze that as it plays-out in the coming week.

Now, on to biotech, SPBIO

Biotech SPBIO ($SPSIBI), Weekly

Some housekeeping first.

Obviously last week, with being short, more downside action was anticipated resulting in upside for LABD.

On Friday, that did not happen. Biotech was part of the squeeze as well.

The short position via LABD, identified as LABD-22-02, was reduced but not exited completely (not advice, not a recommendation).

At present this is where we are.

First, we’ll start by inverting the chart to mimic the action of 3X inverse, LABD.

Next, we’ll zoom-in and highlight the ‘squeeze’.

Doesn’t look like much when viewed that way does, it?

Next, we’re going to zoom-in, on the zoom

In spite of all the squeeze chaos on Friday, price action could not post a new weekly low (high on the non-inverted).

We’ll see this Tuesday, if that’s important or not.

This post is getting long but let’s end with the rule of alternation. The same chart is marked up below.

If this rule is still in-effect, we’re at a juncture where one can expect a ‘simple’ alternation.

We’ve already had complex action on the prior congestion; so, we can expect current action to be simple in character.

That means, price action’s not likely to stick around at these levels whether it’s going up or down.

Based on the above analysis, the expectation for Tuesday’s open is a gap lower for SPBIO and higher for LABD.

If that does not happen, something else is at work … we’ll report on that as necessary.

Summary

Has the market bottomed out? Not likely.

Those who are at this late stage, still arguing with Jerimiah Babe and Dan (and Patera), that the market’s rebounding, everything’s fine, are in a state of delusion.

The mindless herd following spending with ever newer cars, moving up to the McMansion, opulent vacations, posting it all on Facebook is most decidedly, gone.

It’s finished. It’s Done.

The problem is, as J.B. notes above (time stamp 7:15 and 8:30), those still living that life don’t seem to know it’s over.

For the leaders, the tiny minority and those reading this post, who are, or who have been preparing for years, it means potential huge (life changing) opportunities.

That is, as long as the markets, the banks and other infrastructure stay open; not guaranteed in any way.

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