S&P 500, Head & Shoulders Top?

11:40 a.m., EST

Potential Head & Shoulders

The hourly chart above shows the potential.

A pull-back to the hourly low (434.07), gives additional confirmation to the nascent reversal.

In the biotech sector, SPBIO is currently pulling away from the 38% retrace discussed yesterday (LABD higher).

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.

‘Read My Lips …’

3:21 p.m., EST

No More High Prices

This article, just out from ZeroHedge, says ‘consumers’ are in a revolt.

No more high prices.

Buying plans for the major items, housing, auto, appliances has declined dramatically.

One chart, linked here, shows consumer complaints about high prices are the most since the data started … 1961.

The reality is the retail consumer has come to the end of the rope.

To loosely quote Von Mises; ‘If you don’t voluntarily get your spending under control … the market will do it for you.’

To quote another financial source, Steven Van Metre; he has discussed for months, that high prices will be rejected. The economy will contract and bond prices will rise.

Bonds have indeed gone up in anticipation of contraction; or forecasting an outright collapse.

Throw into the mix that we’re going to have some kind of ‘fatality event’ this coming winter; for sure, there won’t be much demand for high priced items … just from the contraction of the population itself.

Which brings us to biotech (SPBIO).

SPBIO (LABD) Analysis:

The unmarked chart of inverse fund LABD is first (just to give perspective):

Next we’ll show that LABD has or is testing support and at the same time, confirming a trendline:

Biotech is the downside leader … sometimes tag-teaming with gold but for the most part it’s biotech.

Positioning:

It’s no secret I have positioned my firm short this sector in a big way since April of this year (not advice, not a recommendation).

That position has been adjusted over the months but has been steadily increased since the intermediate low on June 28th.

Since that low, the position has been increased six times (including yesterday) and may also be done so today.

Summary:

Once again, we’re heading into the weekend. The S&P (SPY) has just printed ‘out-side-down’.

Anyone still want to hold long the market?

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.

Building The Case For Collapse

2:46 p.m., EST

Biotech SPBIO, Down

Inverse LABD, Up

Inverse biotech, LABD above, is confirming a pivot.

The magenta arrows show contact points morphing into a pivot that has two more contacts.

The new trendline was copied, then pasted to the far left of the chart.

It’s clear the new (pivot) trend is identical to the one created when LABD bottomed out this past February.

While the overall markets (S&P, Dow, COMPX) are still showing green, biotech looks like it has started the next leg down.

The original short position via LABD, has remained intact (not advice, not a recommendation) and has been increased five times (including today) since the beginning of this month.

In our view, biotech’s signaling the potential for a very dangerous situation.

Biotech’s headed down and we’re already short; not advice, not a recommendation..

As Livermore said a hundred years ago, ‘surprises tend to happen in the direction of trend.’

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.

Order to Chaos … and Back

10:49 a.m., EST

Biotech Gap Lower, Expected

Fibonacci Day 8

Last Stop Before Chaos?

This morning’s gap lower in SPBIO (LABD higher) was fully expected.

Expected as well, is the retrace in progress as of this post.

Today, is Fibonacci Day 8 from the LABD, pivot low of June 28th.

Biotech (SPBIO) has posted a fantastic time sequence on the daily as well as the weekly.

The gap-lower open in the S&P (more so for SOXX) has everyone sharpening their pencils; wondering, if ‘this is it?’.

It could be.

However, with attention now focused on potential downside, the clean Fibonacci sequences are likely to morph into chaotic movement.

The time for low-risk short positioning (not advice, not a recommendation) in this sector may be coming to an end.

Looking at inverse LABD, and using the Fibonacci retrace tool, it’s likely price action will retrace to at least the 38%, level.

At this point, it’s already close:

The inverse biotech LABD, 15-minute chart (above) shows we’re near the 38%, level.

After today, the expectation is for price action to become SPBIO downside chaotic … long enough to frustrate the late-comers to the sector.

After that, and however long that is, price action may once again become orderly.

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.

SOXX: Textbook Top?

11:48 a.m., EST

By The Book?

SOXX chart: Like something from a book on trading

Price action’s struggling at new highs. MACD’s posting a bearish divergence. Can it get any better for the shorts?

(not advice, not a recommendation)

At least one thing missing (as of this post) is a new daily low. If we get that, it helps provide confirmation of a SOXX, top.

The S&P (SPY ) and the Dow (DIA), have both posted new daily lows as has the Russell 2000 (IWM).

We can also throw in Basic Materials DJUSBM (IYM), making a new daily low.

Recall in a previous update, empirical observation over the years; market tops tend to occur before, during, or just after a holiday week.

Looks like we may be there.

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.

United Airlines … Signals Sell

3:13 p.m., EST

There’s no such thing as corporate ‘leadership’.

At this point, especially after witnessing the ‘lock-step’ positioning of major corporations over the past year, one thing is obvious:

They’re all operating in concert.

The coordinated message is that everything’s getting back on track. No need to worry.

See how ‘normal’ things are? Big companies are even ‘planning’ for the future. Stay calm and take no (preparatory) action.

Indian Summer:

The reality is, just as this link suggests, we’re in an Indian Summer. That is, we’re between two extremes.

The past year can be viewed as the summer heat. Then, we’ve just had a break (advent of fall/winter) with restrictions being lifted … but soon the figurative and literal winter will come.

Think that’s a bit much? Well, let’s just take a look at one item.

The video in the link above, mentions the need for ‘body bags’; that we’ll run out … sounds insane.

Well, here they are … all ready to go.

Which brings us to the markets.

Chart Analysis, UAL:

The long term, Quarterly chart shows the extent of the technical damage.

The 80% drop could be the beginning of a multi year (maybe decades long) decline.

If it was a crash (like lumber futures), it will have the typical crash-like structure.

That is: An initial swift, decisive decline; followed by retracement which then rolls over into a sustained and long term move lower.

Meanwhile, the S&P 500, is hovering at its all-time-highs.

Not only has UAL not made a new all time high (posted way back in December of 2018), the weekly chart shows it’s formed a terminating wedge.

At this point, it’s ‘rolling out’ of that wedge indicating sell or sell short; Not advice, not a recommendation.

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.

Deadliest in World History

3:37 p.m., EST

Injections, Deadliest Ever

Forced Compliance

Biotech Danger Point

By this time, it’s no secret.

The ‘speck’ injections as we call them, have been proven to be the deadliest in world history.

Even with manipulating data by deleting deaths, delaying updates, pressuring medical professionals not to report, the data at this link paints a stark picture.

For reasons likely to be revealed later, major corporations are ‘requiring’ their employees to comply.

Not only that, in the link above it’s the clients as well. One has to wonder, who are ‘clients’ beneficiaries?

Before we leave the topic and move on to the chart, one of the ‘features’ of the injection, is sterilization.

No more employees. No more clients. No more future clients. Somehow that’s an effective business model.

Finally, a cursory review of the local ‘certified’ financial advisers and their websites has not one word about what’s really going on.

Do these people think by avoiding the truth, somehow they’re going to increase their business?

One major nationwide adviser/broker even has (in print, mind you) that ‘we’re going to have the best recovery ever!’

What are they going to say when there’s a “no bid” market and nobody can get in or out?

Crisis will create opportunity for leadership; at this point, there’s not much if any in the financial sector (i.e. ‘best ever’, above).

When the big melt-down hits, leadership’s not coming from the ranks of the ‘compliant’ or the enforced mediocrity of the ‘fiduciary’.

Therefore, we can all take our cue; like this Irish couple who took it upon themselves, to separate from the crowd and escape quarantine.

With that in mind, on to the markets:

Analysis, Biotech

As we head towards the close with about twenty minutes left, the S&P 500, has posted an all-time high.

Biotech, SPBIO and IBB, are still well below their highs but are nonetheless at a point of instability with today’s action.

As the Hourly chart of LABD shows, we’re at the danger point and in spring condition:

A push back into the range above support, is significantly bullish for LABD and bearish for SPBIO.

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.

S&P 500: Trend Break & Test

9:12 a.m., EST

Trend Break Last Friday

Underside Test, In-Process

End Of The Line?

It’s about twenty minutes before the open. SPY, is trading essentially flat.

The daily chart above, shows the up-trend break was last Friday on increased volume.

SPY, has also posted a bearish divergence appearing to show significant weakness; attributed to MACD lines and histogram declining in parallel.

Getting a closer look (below):

Volume increases on the way down and decreases on the way up: Bearish

We also have a terminating wedge:

Yesterday was a test of the underside trend break. Today may continue that test or reverse at the open.

If SPY can somehow get above the trend break, it has a new lease on life.

However, with bonds, the dollar and gold already in reversals, probabilities suggest we’re at the end of the line.

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.

You Are Here

Remember the maps at the mall … that showed the layout and where you were?

Well, here we are:

In candlestick lingo, Thursday was a ‘hanging man‘ set-up.

Friday was confirmation with a lower open, lower close, and penetration of the prior day’s low.

Error Correction:

A prior update made somewhat of an error when it said ‘Of all the major indices, biotech on a percentage basis, is the downside leader.’

Sort of.

The Index Table below is updated to include gold (GLD) and the senior miners, GDX.

In fact, GDX is leading the downside.

From a trading standpoint, GDX has been ignored because it’s such a crowded market. Nonetheless, for different reasons than biotech (i.e. deflation), strictly speaking, it’s the downside leader.

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.

Upwards, Sideways & Down

Fotosearch_k8916628-1That’s the direction of the Dow Jones 30, the S&P 500 and the Russell 2000.

Intermediate and advanced trading professionals understand what this means.

When a market has experienced a long, sustained advance that may cover months and years … near the end of that advance and just prior to the ultimate top, the market thins out.

That’s the process whereby fewer and fewer stocks are participating in the advance.  Essentially, the bear market has already started as more and more stocks fall away from the uptrend.

In fact, ZeroHedge just reported the S&P 500 in its narrowest (11-day) closing range in history:  An unprecedented event.

Now that we appear to be at the upward extreme, what happens next may be unprecedented as well.

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