Eyes On China … FXI

Textbook (YANG) FXI, Short Entry

If the trade’s falling apart, get out.

That’s the admonition from Dr. Alexander Elder in his book ‘Come Into My Trading Room‘.

And so it was. Short position in real estate, closed out.

Even with all the analysis, real estate (IYR) has pushed higher. The short position via SRS (SRS-22-01) was exited just below the stop @ SRS 16.33.

Exiting a trade, frees the mind to look elsewhere for opportunity.

Typically, one would have to wait days or even a week or so for something else to be available.

However, despite appearances, the market is moving very fast at this juncture.

Looking around in those markets, we have a textbook entry signal (to go short) the FXI (not advice, not a recommendation).

David Weis & The Video

Many times, on this site (actually, for years), the Weis video has been recommended.

Next to Wyckoff’s treatise from 1910, Studies In Tape Reading, that video is probably the most important one could ever watch concerning the markets.

In it, he describes a ‘trick’ as he calls it, to get aboard a market that’s already underway. At the time, his discussion was using DE (if memory serves), as the trading vehicle.

That ‘trick’ is highlighted below on FXI

China Index FXI, Daily

This is how the chart looks early in today’s session.

Next, we’re going to invert the chart to mimic what’s seen on leveraged inverse fund YANG.

And now, the signal zoomed-in

The above price action is nearly exactly as presented in the Weis video; even though it was recorded fifteen-years ago.

The above signal is not a guarantee.

It is, however, a high probability low risk set-up (not advice, not a recommendation).

The entry signal was triggered at approximately YANG 11.75, with a stop at YANG 11.02, for a ‘risk’ of 0.73/share (not advice, not a recommendation).

Summary

As this post is being created, YANG is retracing and is currently trading near 11.67, narrowing the distance from any potential entry to the stop.

On a very long term (Monthly) basis, there are interesting things happening in FXI. We’ll be covering that soon in another update.

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

Active: YANG (YANG-22-02), entry @ 11.83, with stop @ 11.30

Recession First … Depression Next

The Last Place To Be … Real Estate

The most illiquid of all ‘assets’: Real Estate

Two quarters of negative GDP (even with cooked books) equals recession.

Next up, full-blown depression.

Some would argue (like J.B. and Dan) that we’re already in a depression … we skipped the recession part altogether.

Do not pass Go. Do not collect $200.

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.

It’s likely to be worse, this time around.

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

It’s a Minefield !

Intentional Distraction ?

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.

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

The ProLogis ‘Connection’

Largest Cap, In The IYR

The French Connection

As with Newmont Mining in the Senor Miners Index GDX, ProLogis is the largest market cap in the Real Estate Index, IYR.

When markets ‘thin-out’, when they reach the end of a long sustained bull move, capital exits the lower caps, the lesser performers, and is thrown into the last man standing; the largest cap(s) in the sector.

In can be argued, that’s where we are now with IYR.

Friday’s Wipe-Out

As expected, because of the near thousand point drop in the Dow, YouTube’s abuzz with everyone attempting to figure out what’s going to happen this coming Monday.

The Maverick does an excellent job (linked here) of posing the question, ‘Where are we’?

He doesn’t even bother with are we in a market collapse; that’s pretty much a no-brainer. It’s the ‘where’ in the collapse, that’s the question.

Real Estate … What’s Next?

From this site’s perspective, we’ll let the market itself tell us what’s likely to happen next.

Since the focus over the past week has been real estate (IYR), let’s look at the largest cap ProLogis PLD, to get clues on the next potential action.

ProLogis PLD, Weekly Chart

First, we’ll look at the big picture.

PLD was vaporized in the last market collapse.

We should also note, it took about 12-years to get back to pre-crash levels; good ‘ol ‘buy and hold’ 🙂

Of course, a multi-year covered call strategy could have been implemented if maintaining long. With that approach, PLD could have potentially become a cash-cow.

Crash Clues

Note on the chart above, PLD didn’t just up and crash; it gave clues well beforehand.

We’ll go into those clues in a later update.

For now, let’s look at next week’s probable action.

ProLogis PLD, Daily Chart

First, the un-marked chart to show where action finished up on Friday.

Next, we see an upthrust, test and sharp reversal.

Price action finished at support and just below the lows set on Monday, the 18th and Monday the 25th.

Wide, high-volume bars tend to get tested.

So, we’re below the lows with a wide high-volume bar. That puts PLD, in spring position.

Summary

Because PLD and IYR (and the rest of the indices) finished at or near their lows, there may be some downside follow-through this coming Monday.

Price action’s the final arbiter but there’s potential for some kind of upside test in the coming week(s).

As a courtesy, the DRV chart below shows the entry location for DRV-22-02 (not advice, not a recommendation) and the current stop.

Note how liquidity has picked up over the last two weeks.

Friday’s volume of 309,800 shares, was the largest ever for the inverse fund.

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.

The Danger Point®, trade mark: No. 6,505,279

‘Bounce’ Fails … Now, What ?

Get Right … Sit Tight

Yesterday’s upside failure (from Monday’s reversal) tells us it’s a very dangerous market environment.

Several YouTubers (here and here) and maybe more, the leaders anyway, have noted they’re providing good-faith analysis and potential tips, but that does not change the fact, ‘You’re on your own’.

The ‘rebound’ that Maverick discussed (second link, above) may have been on Monday and that’s all there was.

Absolutely nothing against him in any way.

If that was it for a bounce, we’re indeed in a very dangerous (to the downside) situation.

The S&P got itself into a Wyckoff Up-Thrust condition, noted here and shown on the daily chart below.

S&P 500 (SPY), Daily

It’s about midway through today’s session.

We can see SPY price action grinding its way down to support near the 410 – 415, level.

Up-Thrust, headed for ‘Spring’ ?

We already know from empirical observation that markets tend to go from spring to up-thrust.

Does it work the other way around … up-thrust to spring ?

From a personal standpoint, I do not have any data to show that behavior exists.

However, with SPY in its current position (near support) we may be about to see if there’s penetration and then attempts to move higher (i.e., in spring position).

The chart below shows current support.

There would need to be decisive penetration to set up the potential for any kind of sustained rebound.

The blue line is a significant support level.

The grey line just above, is also support, where price action is at the moment.

Penetration of either one sets up a spring.

Real Estate, IYR (Daily)

While the S&P fights it out at support, real estate, IYR is doing the same thing.

The previous post was looking for new highs in the sector.

At that time, it looked to be 50/50, odds of doing so.

Now, we’re right at the danger point.

It won’t take much for price action to confirm a spring or a break to lower levels.

It looks like we’ve already had an up-thrust which seems to point probability lower.

With the overall markets, the S&P at support now and deep oversold, points the opposite way, probability to the upside.

Summary

IYR had a shallow, 38% retrace during yesterday’s session before continuing lower and closing near the low of the day.

As that retrace was completing, a short position was opened via leveraged inverse SRS (SRS-22-01) and the stop set at yesterday’s IYR high of 109.58 (not advice, not a recommendation).

As this post is completing, IYR price action’s laboring to move higher (SRS, lower).

We’ll know soon enough if we’re in a breakdown or a spring.

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

Real Estate (IYR) To New Highs ?

If The Bond Market Reverses

The previous bearish analysis was overwhelmed by the larger, upward trend.

Instead of continuing lower, real estate IYR, moved higher. It’s now at another inflection point.

The position in DRV (DRV-22-01) was exited at 32.66, when it was obvious the trade was going to fail.

Taking a hit like that gets one’s attention; there must be something else going on … something on a larger timeframe.

There’s nothing wrong, with being wrong.

However, there is something wrong with being wrong and staying wrong.

If we pull farther out to the longer, weekly timeframe, it looks like there’s danger ahead; possible new all-time highs and Wyckoff upthrust (potential reversal).

Real Estate IYR, Weekly

As with the Junior Miners, GDXJ, it looks like we have yet another Fibonacci time correlation.

During the financial crisis, IYR, posted its low the week of March 6th, 2009.

Thirteen years later, another major inflection point?

Shown below, is a terminating wedge that may have already completed a throw-over.

One probability suggesting new highs instead of a reversal at this point (which seems like even odds) is the repeating tendency of markets to go from ‘spring to upthrust‘.

This site has presented over and again, it’s a common market behavior.

Getting closer-in on the weekly, the spring set-up is identified.

Now, comes the Fibonacci time correlation.

From the all-time highs, the market closed at the lows on Week 8. The print low came one week later.

Using that information and projecting forward, if this correlation is in effect, if it’s valid, we can expect an up-thrust high somewhere during the week of May 20th, to May 27th.

The Bond Connection

The economy is collapsing. The food supply is being destroyed. The consumer is tapped out and using credit to survive.

What on earth could be a catalyst to move real estate, the most illiquid market of all, to new highs?

Bring in the clowns … sorry, the financial press.

Word on the street is the bond market, may be in position to reverse higher.

No doubt, there’s a good technical reason for reversal, linked here.

It’s the financial press and their real estate narrative that will (may) be preposterous.

That is: If bonds (TLT) move higher, mortgage rates will come down, consumers will jump on the opportunity and therefore, she’s a witch !!!

Summary

We’ll see if IYR meets the price and Fibonacci time correlations for potential reversal.

Once there’s a reversal in this market, it tends to do so with a vengeance.

Rising rates have already cut off deals in the works. Prices are coming down and houses are on the market longer. The consumer is priced out.

The pig is already in the python … once that happens, this market sets up a dynamic of its own, a succession of lower prices and sales collapsing.

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.

The Danger Point®, trade mark: No. 6,505,279

Bonds Down … Real Estate, Next ?

Visions of 2008 ?

The Head & Shoulders pattern on the weekly chart of IYR, could mean reversal ahead.

Price action’s been attempting to move higher over the past twelve trading days.

‘Attempting’, because it’s not making any significant net progress.

Essentially, we’ve got what’s called ‘evidence of a struggle’ where the bulls may be exhausting themselves.

The last update on bonds (TLT), said they’re at the danger point where an upside reversal was possible.

That update also said:

“At this juncture, there’s either a reversal and much higher levels or down, with rates higher; in turn, leading to the subsequent collapse of real-estate, a-la 2007 – 2008.

Since then, bonds are lower, rates higher. Housing affordability has collapsed.

Real Estate, IYR, Weekly

At this point it’s a clear H&S, pattern.

The daily chart shows IYR, oscillating around an axis, support/resistance line; struggling to move higher (in up-thrust condition) with no real progress.

As with bonds in the April 3rd, update, we’re at the danger point with IYR.

A decisive move below the axis (blue) line would indicate the bulls may be exhausted.

Because price action’s been in this range for over two weeks, lends support to the possibility any breakdown (or breakout higher), may be a sustained, directional move.

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.

The Danger Point®, trade mark: No. 6,505,279

Real Estate … Slipping Away

Mid Session

‘Frog In The Pot’

Once price action enters back into a previous trading range, the clock starts ticking.

Since IYR’s at the upper bound of the congestion zone, there’s still a possibility it can right itself and pull away to the upside.

Mid Session

During the mid-session just now, price action is pushing slightly higher and testing the underside of the range (upper blue line).

This is normal behavior … and we’re going to wait it out (not advice, not a recommendation).

For IYR to break out to the upside, there would have to be some major demand to launch IYR prices higher; just where would that demand come from?

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.

Real Estate (IYR), Reversal?

After The Close

Attempts To Short Abandoned Last April

The last update on real estate (IYR) was at the ‘abandon’ arrow. At that time, the assessment was, even though conditions appeared set for reversal, it just was not happening.

Something else was going on.

It came out weeks later, that ‘something’ was entire subdivisions were being purchased (above asking price) out from under qualified potential homeowners.

Well, has that trend finally exhausted itself?

Last week’s climactic price rise and volume, which is quickly being eroded suggests were at some type of transition.

An initial position in DRV (3X inverse IYR) was opened today as shown (not advice, not a recommendation).

Pushing below the support level around IYR 107, would help confirm there’s something more going on than just a breakout and test.

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.

Position Change

DRV pushed through our stop early in the session; position closed (not advice, not a recommendation).

1:50 p.m. EST:

Despite all the analysis, IYR is showing continued buoyancy.

Something else is going on; possibly related to Uneducated Economist’s link provided in the last update.

Taking his cue, a functioning mortgage market is all important to the financial narrative, it’s possible this market will be more heavily manipulated than others.

At this juncture it would make sense. All indications are for reversal … yet it’s not happening in any significant way.

Time for another trade.

We’re going back to a market that in retrospect, should’ve been the focus all along; Biotech.

This site’s coming from the perspective those reading, are well aware the ‘speck’ as we call it (to avoid censorship) was a fabricated event.

Just a reminder that we’re not some ‘Johnny come lately’, here’s the link from way back in May, last year.

That post proves the situation was figured out well before the May 17th publish date (interviews, observations conducted a month prior).

What’s not fabricated however, are the repercussions from the so-called cure for the speck.

Unfortunately, those are happening now and are quite real.

Moving on to the trade.

Despite the number of transactions shown in the Project Stimulus table (below), the objective is to minimize activity. We’re looking for a mid, to long term sustainable move; gain potential, 100% to 1,000%.

Updated previously, very long term (Quarterly) IBB has reversed.

Monthly and weekly have reversed as well; both the monthly and weekly MACD indicators point down. Daily is essentially flat.

The hourly chart of LABD (3X inverse IBB) shows the entry location and subsequent price action. Stop is the session low @ 22.23 (not advice, not a recommendation).

It’s worth repeating, the false narrative on the speck and consequences of speck protection may blow up in the media (and biotech) at any time.

As J.P. says, getting people to do something they know is bad for them (or lethal) is the ultimate ‘elite’ high.

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.