Print High & Close

The table lists well known index ETF’s; along with most recent highs and current (Friday) close:

All the usual suspects are there:

S&P 500, SPY, The Dow 30, DIA, Nasdaq, QQQ, and on.

What’s also listed is how far each index (ETF) is from its most recent all time high or ‘recovery’ high (in percentage terms).

Obviously, one of these is completely out of bed: Biotech, IBB

We’ll be discussing the technical condition of biotech tomorrow. For now, the updated ‘project’ chart’s included below:

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.

S&P 500, Danger Point

Early in the pre-market, SPY is trading unchanged.

Looking at the daily SPY close, we’ve got a tentative breakout just above resistance (black line).

Lower right of the chart shows upward thrust energy has declined significantly … right along with volume.

Yesterday’s update showed longer term momentum (monthly, weekly) for the S&P was pointed up. Continued price action drifting higher is possible.

However, if there’s a reversal in the making, this is a good place to start.

The buyers (volume) have backed off at this level; leaving the SPY hanging just above breakout resistance.

The SOXX, QQQ, and IBB are well off their highs and may be leading the way lower. Our focus remains on shorting biotech IBB, which is the weakest of the three (not advice, not a recommendation)

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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.

Off With Their Heads

Head & Shoulders patterns are showing up in several markets.

First, there’s biotech IBB … and now the SOXX.

The SOXX is higher in pre-market around +2.5% , +2.70%, near 385.25.

Conversely, inverse SOXS is down -9% to -10% near the 14.00 -area.

Today could be the day where risk is minimized to position short via inverse SOXS (not advice, not a recommendation).

If SOXX remains below yesterday’s high of 397.71, it has set itself up to break the neckline. Once that’s completed, we’d then have a measured move lower to around 320.

If short via SOXS, the stop would theoretically be yesterday’s low of 13.21.

We all know however, inverse funds and especially the 3X versions, have significant negative erosion.

If during the regular session, SOXX price action persists throughout the day near yesterday’s high (397.71), inverse SOXS will continue to erode below its own prior daily low.

A different view is the Right Shoulder has not been completed. We’ll know that if SOXX makes a new daily high.

It’s a myriad of scenarios and the professional understands there’re an infinite number of outcomes. However, at times, risk is reduced enough to take a position on a probable direction.

At this juncture and given the above conditions, the most probable direction is down.

One last caveat.

SOXX has broken below well established support. That puts it in Wyckoff spring position. The market will automatically attempt to rally as we see in the pre-market.

Based on the conditions described, we’re expecting that spring attempt (to new all time highs) to fail.

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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.

Hanging by a Thread

Semiconductor SOXX, is hanging by a thread.

Did SOXX just break away during the past week or is there going to be an attempt to close the gap?

When a market closes down for the week and near its lows, there’s usually follow-through action at the next open.

SOXX may never get the chance to fill the gap.

If we look at inverse fund SOXS, it’s showing a potential trend-line. Maintaining that line will double the price (at Friday’s close) sometime in early March.

The chart below also shows the firm’s entry point; not advice, not a recommendation.

In a way, semiconductors are similar to aviation; margins are razor thin.

When there’s an economic down-turn, both get hit especially hard.

At this juncture, I have positioned my firm short in both real estate (via DRV) as well as short the semi-industry (via SOXS). Not advice, not a recommendation.

The SOXS position finished in the green by the close. DRV is showing a loss but closing that gap quickly.

Separately, and in a report planned for tomorrow, we’ll cover the food supply. The ongoing (planned) shortage is proving correct, the approach it’s ‘corn first, then silver and gold’.

If Van Metre’s GDX forecast is on target (declining to 17, or even 14), gold bugs may find themselves liquidating their positions; just so they have enough money to pay for hyper-inflated food.

In effect, gold will be irrelevant; a very possible (short-term) event.

Stay Tuned

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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.

All Markets Down

Pre-market action has all major indexes trading lower; SPY, DIA, QQQ, SOXX and IWM; all down.

Real estate, IYR has no real pre-market volume (20-shares) so its open is unknown. However, inverse fund DRV, does have volume (3,700 shares) and its action is up about 4%.

The daily close chart of IYR (above), has price action contacting an established axis line.

That was yesterday. Over the past two-weeks, as price ratcheted higher volume has declined (circled area enlarged).

That decline indicates lack of commitment at these levels.

Yesterday’s close also put IYR firmly in up-thrust position (ready for reversal).

Over the past week, short positions were opened using DRV (not advice, not a recommendation)

Average price of the short equates to DRV @ 9.92; not far from current pre-market trading.

If IYR posts a new daily low (below 86.62), it’s another data point the anticipated reversal may be at hand.

The rising action has changed the P&F forecast reported a few days back. Updates will be forthcoming.

If this is the start of a sustained reversal, the plan is to build the short position as price action dictates.

The downside of the entire market (S&P, Dow, etc.) is immense. Commercial real estate is especially vulnerable. Price action itself tells us that.

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.