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
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
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
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
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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
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
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.
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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:
Nobody’s paying attention to this index. It may be one of the cleanest (technical) short opportunities.
Basic Materials. Sounds boring.
Sounds like fertilizer … and it is … right along with industrial chemicals.
Three largest cap in the sector are below:
Industrial gasses, Linde AG
Industrial gasses and chemicals, Air Products & Chemicals
Water purification, Ecolab
DuPont is next and then Newmont mining. So, this is a potential deflation play (Newmont) as well.
A post just out yesterday, Uneducated Economist does an excellent job destroying the inflation narrative.
Steven Van Metre has also repeated many times, we’re likely to get a deflation impulse first before inflation.
One of the most important things he’s said, the Fed is not going to correct the public’s (false narrative) perception that inflation’s the danger.
If everyone’s pointed in the wrong direction, and it serves their interests, why correct it?
Which brings us back to Basic Materials. ‘Nobody’s watching’ this index. How do we know?
Look at the inverse fund, SMN.
Russell 2000 inverse, TZA, averages 6 – 10 million shares per day. Compare that to SMN’s 2,500 shares on a good day.
Volume does pick up as price action becomes active. Some days will be 100,000 – 200,000 shares.
Looking at the technical condition, there are bearish divergences on both daily and weekly time-frames. The chart at the top shows a Wyckoff up-thrust (reversal) condition just tested yesterday.
The response is to go short via SMN (not advice, not a recommendation).
Since we’re actively managing accounts throughout the day, it’s not a problem to monitor SMN and the bid/ask of the fund when trading is light.
The ‘project’ table has been updated:
Pre-market has SPY trading down about -1.5 points or -0.40%. The expectation is for Basic Materials to follow suit.
Stay Tuned
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The last update on the SPY said this:
“The SPY shows a nascent reversal. Price could come back to test resistance (black line) or continue to decline from here.”
That’s what it did. Price came back to test.
It’s early in the pre-market and SPY is showing a slightly lower open; currently down -1.29 points, or about -0.32%.
Thrust energy on the test was low. There’s potential for continued down action from here.
Recall that last week’s price bar was a reversal. A new weekly low would help confirm there’s more (sustained) downside ahead.
The ‘project’ is already short real estate via DRV (not advice, not a recommendation). If it follows suit, downward action in IYR can be expected.
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The Danger Point® 