Yesterday’s action in the markets looked like a short squeeze; a sharp, near vertical move higher.
Only later can one be sure. When the squeeze is over, prices collapse.
At this point we’re at a critical juncture.
A reversal could signal the beginning of the next leg down.
With that in mind, SPY is trading lower in the pre-market session.
Looking behind the curtain, we see how deep the rabbit hole goes.
Nearly a century ago, back 1921, Jesse Livermore said in an interview, the prime objective of the markets was “deception”.
Nothing has changed.
Price action is truth; all else is vanity.
Over the past several days, the market looks to have made its turn.
If we’re in that next leg lower, at some point the curtain will be pulled back to reveal what may be the largest financial wipe-out in history.
A reversal in Biotech was identified two days ago. That reversal continues with the sector (IBB) opening gap lower.
While the rest of the market is well off its highs, the biotech sector (IBB) made a new all time high just yesterday.
The problem is, it’s a reversal. Price action opened sharply higher and then closed lower on heavy volume.
It’s taken nearly five years for biotech to push past highs of July 2015; Not a roaring bull market
As the current medical delusion fades into some other delusion, focus on biotech may fade as well; Look-out-below when insanity returns to reality
Could it be at this juncture, going short the biotech sector is the least risk trade?
While all eyes are focused on the “V” recovery, the bond market is in a stealth reversal; interest rates moving higher.
Everyone’s expecting negative rates. What if that does not happen?
Today (Tuesday, May 12th) could be the day where the long bond (TLT) makes a new daily low; confirmation we may be in a dangerous reversal to higher rates.
For those who can remember the fall of 1987, the market was extended; bonds had already pivoted to the downside.
Part of success in the markets is the ability to catch the nuances of price action or sentiment.
Once such nuance is the decision of Sven Henrich to take (up to now, no cost) market updates, and move them behind his website firewall.
Just a casual viewing of this latest YouTube post, should be enough to determine that his level of skill and market acumen is at the highest level.
So, the market (S&P 500) made a potential historic reversal last week and Mr. Henrich goes behind the firewall.
One can take that nuance and project it out (based on unprecedented market extremes), that we’re in the very beginning stages of a world-wide, historic market crash and ensuing economic depression.
What are the odds?
What are the odds that IWM, the Russell 2000 tracking ETF is going to make it above the resistance level shown?
This resistance area is an exact Fibonacci 38% retrace off the lows.
Other markets such as S&P are doing better in their retrace. Small caps seem to be the worst off.
Using Wyckoff theory, in a bear market we are to focus on the weakest sectors (for shorting).
IWM and its tracking inverse TZA are at the danger point. Upward risk for a short position is low; while downside opportunity as previously stated (in the “Whacked!” update) is near the 2009 lows.
It’s been over two years since Carl Ichan gave his Blackrock “Party Bus” speech right in front of the Blackrock CEO himself: Larry Fink.
Our short video of BLK shows just one dramatized (but then again, maybe closer to the truth) outcome if we have indeed seen the highs.
For a more serious look at the technical picture, go to this link for analysis.
Sharpening one’s pencil to the nub, attempting to calculate corporate earnings down to the gnat’s gonads, is a futile task.
The consensus miss on the recent earnings release from Chicago Bridge and Iron (CBI) is just one case in point.
A much better approach, one that’s been proved since the early 1900’s is the method used at this link.
Clicking on the S&P Sector Archive shows two recent charts of the S&P 500. Price action of the market itself identifies the next likely direction.
A century ago, the father of technical analysis (Wyckoff) stated it himself:
‘The most important thing in Wall Street is to know what will happen next.’
So now the S&P has reversed. That fact presents the next question … what will happen next?
The answers do not lay in earnings reports, interest rate pronouncements or unemployment numbers.
The answer to market direction is in the market itself.
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