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.
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.
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.
Not to be outdone, we have this ‘me too’ melt-up article as well.
Let’s not forget, all the ‘Fed must do something’ rumors and feigned concern by its members.
If anyone really wants to know the big picture, the overall plan (a wide majority do not), this interview may be the best explanation to-date.
With all of that, we certainly could get some kind of rally in the coming week. We’ll let the price action speak for itself.
As a reminder, Wyckoff analysis does not concern itself with press releases, rumors or ‘fundamentals’; Wyckoff himself, determined based on price action alone, they have no material effect on market movement.
In his words, ‘other forces are at work’, and it’s those forces that interest us.
Gold & Silver
As said in this update, gold (GLD) was just ‘ticks’ away from posting a new monthly low. In fact, it got just 0.24-pts, from a new low before rebounding.
Of course, each time we get any kind of rally in the metals, there’s the usual hysteria. Even though for the past seven months and counting, those rallies occur at lower and lower levels … i.e., a bear market.
Shown below, it’s in a trading channel with price action at the right-side channel line.
Gold (GLD) Weekly
The chart below gets closer-in.
From left-most contact point on the channel to the initial contact on the right side is a Fibonacci 13-weeks.
Also note, the weekly high posted at the center line is a Fibonacci 5-weeks from the left-most contact.
Highly emotional markets tend to adhere to Fibonacci until either the emotion wears off or ‘everybody’ recognizes the structure.
Obviously, to keep the channel intact, a lower open (and lower action) at the next session is needed.
Looking at the daily chart of TLT below, Friday’s level of (down) volume has occurred only three times in the past three years.
Each time, there was a near immediate rebound or in the case of March 2021, the rebound came several weeks later.
Bonds (TLT) Daily
Moving in closer, we see the possibility of an ‘island-gap’ at the next open.
What could drive capital into the bond market?
Well, how about a ‘shock’ or continued market melt-down (not advice, not a recommendation).
A quick check of the local newsfeed (as of 12:45 p.m., EST) shows nothing on the horizon other than usual nuclear attack threats, power outages, child mutilation protests, marauding bears and the disarmament of Canadians.
Nothing to see here …
Real Estate
There is no mistake, events in real estate are happening at the fastest pace in recorded history.
As Scott Walters put it, over 10-million people bought into the ‘work from home’ hype and got themselves instantly (nearly) upside down in their transaction.
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.
We’re going to use the chart from yesterday’s post to set the stage for getting closer-in.
This past Friday’s early morning ‘spike’ is barely visible; the 30-minute (inverted) chart below, has more detail.
SPBIO, 30-minute (Inverted)
Price action rejected the lower levels (higher on SPBIO) and pulled away throughout the session. That ‘pulling away’ continued on, all the way into the close.
That’s a clue there may be follow-through at the next session.
If the early session opens ‘gap-higher’ (SPBIO, lower), into the resistance area (four magenta arrows, hourly chart), it would be the fourth time pressuring at this area; markets rarely hold a fourth attempt.
Summary
Of course, other markets are being watched like real estate (IYR), Tesla (TSLA), and even Basic Materials (DJUSBM), a potential sleeper for significant downside.
Updates are planned if/when low risk shows up.
Positions: Current Stance (courtesy only, not advice).
The following is the positioning of my firm’s main (largest) account.
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 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 up–thrust‘.
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.
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 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.
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.
Bonds are at the danger point; poised for upside reversal.
Upside?
Bonds up, rates down, is that even possible?
The weekly chart of long bond proxy TLT, is below. It’s not called ‘the danger point’ for nothing.
Weekly, TLT
The danger point is not the top or bottom of a move.
It’s the area where risk is least for either direction. Where the cost of being wrong is reduced as much as possible.
Getting closer-in on the weekly, price action has penetrated support (blue line) and has stopped-dead, so far.
Note the bullish divergence in MACD and MACD lines. It’s not a strong divergence but it’s there.
Next, we have a (bullish) wedge pattern. It’s a big one that took over a year to post.
The False Narrative
If one is serious about their work in the markets, eventually there’s a realization, every narrative is false. The media serves the purpose of the owners and nothing else.
They’re under no obligation to print (or broadcast) anything near the truth, going whole-hog on that ‘freedom’ and fleecing the public at will.
Using that premise, we can say the ‘inflation’ narrative is false or at least twisted; partially true.
The Bond Sell-Off
With incessant dollar ‘collapse’, dollar ‘end of the road’, inflation ‘rampant’, yada-yada, day after day, it’s no wonder bonds have sold off.
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.
Summary
Would I personally be a bond buyer at this point … no. I’m not keen on buying the debt, any debt of a bankrupt nation (not advice, not a recommendation).
It’s important to note, if bonds do rally, the catalyst may be a perverse ‘flight to safety’ on the public’s part resulting from significant downside in the overall markets.
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.
This update proposed we’d get a penetration of support sometime around the upcoming Fed meeting on the 26th of this month.
However, today, TLT price action has moved lower, penetrated support and is resting just below those levels.
Long Bonds (TLT) Weekly
The Weekly chart shows price action hanging just below support levels (blue line).
TLT is at the danger point where risk of going long, is least (not advice, not a recommendation).
My firm has no interest in buying the debt of a bankrupt nation … any nation. So, we’ll stand aside on going long the TLT.
However, we can use this action as a proxy for the overall markets. That is, a strong TLT upside reversal may indicate downward acceleration in the major indices; S&P, Dow, QQQ and on.
Senior Miners, GDX
The daily chart of GDX has posted a new daily low.
This action helps to confirm that GDX remains in the downward trading channel, discussed here and is now continuing to move lower into that channel.
Positioning:
Remaining short GDX via DUST and increasing position size as the market allows (not advice, not a recommendaiton).
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.
Hovering right at support, the long bond (TLT) is threatening to break through to the downside.
The usual suspects are out (here and here) pontificating about how many rate hikes there’ll be this year or how the Fed’s ‘not doing enough’ to combat inflation.
By now, anybody with two basis-points rubbing together should know, the Fed’s not going to do anything for anyone except itself.
If you’re reading this and have not separated from the nonsense, predictive programming, and mass-psychosis that is the financial press, feel free to do so now.
Not that one has to ignore them altogether.
It’s ok to monitor what they’re doing but ‘ol Zig Ziglar probably stated it best when he said (paraphrasing):
‘I read the Bible and the newspaper every day. That way I know what both sides are up to’. 🙂
Incorporating that worldview into one’s analysis is a healthier, more sane approach than trusting government statistics or mainstream propaganda.
Of course, one also has to be able to strategize and read price action. That’s the hard part.
So, let’s take a look at what bonds (TLT) are doing; then come up with a potential reversal (to the upside) scenario.
Asset Confiscation
Wait !!!
Bonds up and rates down? How is that possible. Aren’t interest rates going up in 2022?
Well, it could happen.
However, there’re several behind the scenes agendas at work; not the least of which is asset confiscation of the middle-class: “You will own nothing”, right?
This confiscation scheme has been planned for so long, it’s even got a name: Neo Feudalism.
If market participants and ‘investors’ find themselves in yet another wipe-out, they’re going to flock to the supposed ‘safety’ of U.S. bonds (just like they did last time).
Couple that with a few potato-head executive orders saying the market’s too dangerous for the proletariat; only bonds can be purchased and voila!!!
Long Bonds, TLT
Will that scenario above, play out in 2022?
Of course, that’s unknown until it actually happens.
However, what we do have as shown in the weekly chart of TLT, is a potential bear trap setting up.
Price action finished this past week hovering just at support. The range narrowed and the volume declined slightly … in effect, validating that support.
We’ve got an FOMC meeting coming up with the usual suspects issuing a propaganda statement at 2:00 p.m., EST on the 26th.
What To Watch:
Between now and then, bond price action could re-write the entire script just as it did with the gold market set-up.
Back then, the original gold (GLD) breakout idea was tabled only to have it show up again a few weeks later.
Note: Gold (GLD) broke to the upside exactly at the (purple) circled area shown:
Time and location, identified in advance.
Of course, the markets are a fluid and fractal mechanism. We’re dealing with probabilities and strategy, not pure (one answer only) mathematics.
Anything can happen.
However, given all the above discussion, the chart of TLT shown, has a reasonable potential to trap the bears in a bullish reversal if it penetrates support.
What’s the most likely time for this to happen?
Well, that would be on or about 2:00 p.m., EST, January 26th (absolutely not advice, not a recommendation).
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® 