‘ … we’re at the 161.8%, projection and USO is hesitating; at the same time, Nat-gas, UNG, appears to be forming a long-term bottom’
The implication was: We’re at a Fibonacci level in USO, while the ‘herd’ has positioned themselves (massively) long and Nat-Gas appears to be reaching a (potential) long-term low.
Three trading days later, we have this:
Oil Tracking Fund USO, Weekly
If you look closely, the grey dashed line, the Fibonacci 161.8% projection, is just visible and extends out of the green line, highlighting that level.
A possible, nascent reversal.
Way back in 1902, after studying the markets intently, Wyckoff, discovered the following (paraphrasing):
‘Forces were at work, moving prices around, independent of any fundamentals, not connected to any valuations.’
Nearly, a century later, Prechter says this as well in one of his many interviews (paraphrasing, again).
‘If somehow, I was able to give you the newspaper headlines for tomorrow, you would not be able to tell me if the market was going to go up or down’.
The media is presenting oil (gasoline) and Nat-Gas prices as inversely correlated. Looking at the topping chart of USO and the bottoming chart of UNG, it’s believable … for now.
Downward thrust in Nat-Gas UNG, appears to be exhausting itself after a 20-month, bear market.
Risk is never zero, but currently appears to be at a low for UNG (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.
Before we get started, biotech may have decisively turned the corner to the downside with this, just out … maybe.
‘Zero Respect For Thieves’
Before we get started, with getting started, a brief mention on thievery.
Years ago, Dr. Elder stated he had ‘zero respect for thieves’; those who had stolen his book tile, ‘Trading For A Living’, in various forms.
When you have limited skills and even less insight, thievery is the only way to go … that is, until you’re found-out.
Turns out, the analysis of silver SLV, posted on this site (here and here) nearly two weeks ago, specifically the presence of SLV volume ‘spikes’ at inflection points, may have been ‘lifted’ without citation by a prominent YouTuber (who will not be named … yet).
It may have been just a coincidence. If so, all is well. However, a ‘second time’, not so much. So, let’s all play ‘nice’ shall we? 🙂
Now, on to biotech.
Biotech, XBI, Daily
This update is being released just before the open. It looks like XBI, is about gap-lower.
We see in the chart, XBI, is respecting the Fibonacci projections.
As with the recent oil market analysis and USO, (here and here) we let the market decide what areas are important.
In the case of XBI, and unless significant demand comes in, lower prices appear to be the most probable direction (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.
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.
Storage facilities in Texas are paying to have someone take excess Nat-gas.
As this link says, the ‘reason’ for negative Nat-gas, is high oil prices prompt drillers to increase oil production, along with (by-product) Nat-gas, driving down the price.
We’ll cover Nat-gas (UNG) in a separate update which by the way, on Friday, posted another Wyckoff spring set-up.
The question du jour is, ‘does oil go higher from here?‘
If oil is going higher (or likely to go), then Nat-gas may be pressured downward for longer.
International Chaos
The amount of ‘pontificating’ from the media on what oil is, or is not going to do, is mind-numbing.
Wyckoff himself said, we’re attempting to find out ‘the next probable direction’ for the market, which of course, can never be known for sure.
With that, let’s go to the truth of the matter, the chart.
Oil Tracking Fund, USO, Weekly
Shown on the chart, is a Fibonacci projection from the lows of March 2023, to the first wave high of April ’23, then back down to the wave low, in May ’23.
It might be hard to see, so the first waves are highlighted with green dashed lines.
At this point, instead of asking the question ‘where’s oil going?’, a better question may be, ‘is the chart of USO “respecting” the Fibonacci projections?’
Looking at the chart, it’s an obvious, yes.
Right now, we’re at the 161.8%, projection and USO is hesitating; at the same time, Nat-gas, UNG, appears to be forming a long-term bottom (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.
Since the lows last November, to the close this past Friday, gold (GLD) has moved higher by a decent but modest 15.4%.
Naturally, the opportunists are out telling us ‘We’ve been warned’, ‘this is it’, ‘it’s going to the moon’ … yet again.
With that backdrop, we’re going to look at the precious metals facts, not the hype.
‘Precious metals’ because there are only four that have ‘currency code’ classifications, i.e., are classified as an asset with ‘currency like’ monetary characteristics.
Way back over a century ago, Wyckoff discovered the key to understanding the next likely move of the markets was the study the market itself (not fundamentals).
Wyckoff essentially ‘locked himself in a room with just a stock ticker and phone line’.
That’s not saying ‘money printing’ has no effect. There are a lot of moving parts. Intentional destruction of the food supply is just one of those parts.
Old School Analysis
Hypothetically, if you dropped an ‘old-timer’ into the markets at this juncture (without him knowing the ‘hype’), and showed him all four charts of gold, silver, palladium, platinum, and asked ‘what’s happening?’
What’s his response?
After a brief look at the charts, he would likely say:
‘Gold’s move higher is not being confirmed by the other precious metals’.
Note that all four metals peaked together during the inflation spike of 1980.
Ergo: At this juncture, something’s wrong.
Either the other metals are going to ‘catch up’ to meet gold or gold is going to come down to meet the others.
That is of course, unless this time is different … somehow.
With that, we’ll look at the chart of gold to see what it’s saying about itself.
Gold GLD, Weekly
We’re starting with the unmarked chart.
Note: Elder’s Force Index scale is expanded to show the nuances of GLD, price action.
Next, we see we’re at a test of the trendline in place for 16-months before the downside breakout of July, last year.
Moving in closer, we have a wedge formation prior to the up-move last week.
Is this a breakout to the upside or a throw-over?
At this point, it’s unknown.
We can see that Force Index is below where price action entered the wedge during the week of November 11th.
Less force up into resistance (trendline), paints a slightly more bearish than bullish picture.
The ‘Why’ Comes Out
As if on cue and in classic Wyckoff style, we have a ‘why‘ for the move off the lows of last November.
Classic Wyckoff, because he said the ‘why’ of a move comes out after the fact.
There you have it; China buying gold last November and December.
During this move from the recent lows, it was certainly a trading opportunity for the bulls … but from a strategic standpoint, what happens next?
The Non-Confirmation
Non-confirmations can last a long time.
For example, the Oil & Gas sector XOP, declined for eight months, from April 2019 to January 2020, before the price of oil (USO) finally broke lower.
With the ZeroHedge article just released a few hours ago, we can expect at least a blip higher at the next GLD, open.
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 Russell 2000 (IWM as proxy) has been congesting sideways for about five months.
While the overall markets, S&P, Dow, SOXX, IYR and the QQQs, have been moving on to new highs … the Russell has stagnated.
Taking a cue from Steven Van Metre’s reports on ‘who goes first’ in a downturn, it’s the small caps.
At this juncture, it looks like the Russell’s ready.
The six month daily chart of IWM below, shows choppy action.
Pulling back somewhat and labeling the bearish wedge, puts it into perspective (second chart):
Pulling out and labeling the wedge:
One item of note (not shown) at the top of the wedge, where price action pivoted lower (August 6th), is a Fibonacci 62%, retrace level.
So, we have a bearish wedge retracing 62% … along with non-confirmation of the overall highs; S&P, Dow, SOXX, etc.
Major reversals take a long time to form. However, once they get underway, it’s like a juggernaut to the bottom.
Harkening back to the oil (USO) bear market of 2014, nearly all (if not all) the YouTuber’s at the time, completely missed the bearish set-up.
What they did instead, once the downdraft started, was pump out update after update about ‘catching the bottom and setting up for the new bull market in oil’.
It never happened.
Oil continued lower for a year and a half before getting into a sideways range.
The big money’s in the big move. Monitoring the Russell provides confirmation a significant reversal’s in the works (not advice, not a recommendation).
As with biotech (SPBIO), already in a bear market, the IWM could break lower while the overall markets continue to thin-out and even make new highs.
Recall, we’re getting close to an up-coming holiday: Labor Day
The 1929, high was on the Tuesday just after Labor Day weekend.
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.
Sentiment can’t be seen on the chart. One can guess but it can’t be measured directly.
Sentiment change comes first.
That change in turn, results in a change of volume, i.e. ‘commitment’.
Then, after commitment dissipates, price is next.
That looks like the current situation with biotech and specifically inverse fund, LABD.
In what may be an idiot or genius move (depending on outcome), the short in biotech SPBIO (via LABD) has been maintained throughout the current down thrust; not advice, not a recommendation.
The reasons for that decision have as many layers as the proverbial onion. Not the least of which, is a market break anywhere from 20% to 50% (in our view) can happen at any moment.
‘Never happened before’, one might say.
Oil futures in their entire history have never gone negative before, either.
Bonds, in their entire history have never been shorted by four-standard deviations before, either.
A world-wide coordinated push to euthanize the entire population has never happened before, either.
Margin debt and valuations have never been higher before, either.
Underlying liquidity has never before been removed to the current extent, either.
So, we each have our own reasons.
The firm’s main account (not the Project Stimulus account) has drawn down about – 13%, on the current short position.
A core position has been maintained but small amounts have been removed and added based on price action.
When the anticipated gain, is high hundreds of percent and maybe above 1,000%, the draw down above, looks acceptable considering the (potential) opportunity.
On to the chart:
The daily chart of LABD, shows both net downward price action and thrust energy are dissipating.
Note the ‘Force Index’ scale has been accentuated to better show the divergence.
We’re looking for price to move back higher to test support/resistance areas.
If or when it does, the plan (as has been from the beginning) is to continue to add LABD until volatility makes it prohibitive.
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.
Yesterday, was an upward push that wound up being an ‘out-side-down’ bar (GLD, GDXJ, SLV) … a reversal in itself.
That’s not in the script. Or, is it?
At this point, the public’s literally redirected, manipulated, at will. It’s a sick game being played by all who control the media.
From a personal standpoint, I’d rather make some popcorn, take my red wagon full of fiat, go camp down around $800/oz., and wait.
The gold ice cream man may never show up. If he does, great.
If not, there’re other opportunities; at least I’ll not be one of the manipulated masses screaming inflation hyperbole if/as/when gold ratchets all the way down.
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.
That was a phrase from the late David Weis, used during his training session video (link here).
That’s what we’re gong to do.
Biotech (IBB) is nearing support and it was thought the overnight would result in an obvious gap-down open, exit signal.
However, with just about a half-hour to go before the regular session, markets maintained their positions overnight keeping the door open for continued decline or counter-trend action.
All markets, the S&P, Dow, Nasdaq, (and biotech) are pivoting lower from insane valuations. We could be at the very beginning stages of a sustained deflationary move.
One example of how such moves behave, was the oil market in July of 2014. The tracking fund USO, had nine successive down months (declining over 60%), before a significant retrace.
With that in mind, we’re setting the LABD stop at the prior session low of 21.80 (not advice, not a recommendation).
With an LABD entry point at 18.08, being stopped out at 21.80, would yield a gain around 21%.
So, we’ll leave it there and move on to other opportunities.
The weekly has IBB, nearing support around 140 – 142 (dashed line). We can expect price action to hesitate as (or if) it encounters those levels.
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® 