Biotech Reversal, Repeating Trend

9:45 a.m, EST

Price action itself defines the trend

The unmarked hourly chart (above) of inverse fund LABD, shows the location of the last update.

That update called for LABD to reverse higher; based on thrust action of the market itself.

Soon after (magenta arrow), LABD pivoted higher.

The right side action has a familiar repeating trend:

The chart below is a compressed version.

The repeating lines have been added. Arrows show contact points:

Strictly as a courtesy, daily chart of LABD is below with notations of buy and sell (not advice, not a recommendation) for my firm’s main account.

A good many that monitor this site have probably become bored with biotech … just as they did with Steven Van Metre’s analysis of bonds (back at the lows).

Van Metre is providing an excellent service. True, he probably has people moving their accounts to him. He’s running a business after all.

However, that does not negate the fact, he’s one of, if not the only one saying that we’re about to enter a deflationary environment (if not just temporally); complete opposite the conformist (and media led) crowd of hyper-inflationists.

Even Johnny Bravo has said, ‘hyper-inflation will come … but when?’

Summary:

The short positioning in biotech (via LABD) continues: Not advice, not a recommendation.

Rumors are swirling now about power outages and cyber attacks with major corporation website shut-downs.

Does anyone really want be to playing around with long positions when torpedoes (to hit the market) are already in the water?

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.

‘Read My Lips …’

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

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.

Garbage In … Garbage Out

10:49 a.m., EST

Another day spent digging in the trash

This morning’s perusal through the usual suspects of finance, leaves the feeling you’re sifting through garbage.

Every once in a while, like yesterday’s post, there’s something useful.

Most times, not.

Today is no different.

Here we have an article about the ‘bond bloodbath’ and how inflation is not transitory.

Instead of falling into the trap of contesting the current false narrative, we’ll take a different approach.

How can the constant stream of financial nonsense, lies and miss-direction, be put to use?

Since the article linked above is about bonds, we’ll use that for our example.

The Bond Market (TLT):

First, the David Weis training video (linked here) has been discussed many times over the years.

We can’t make recommendations but we will make a suggestion; that is, whatever the video costs at this point is well worth it.

Our TLT market entry technique (below), is taken from that video (not advice, not a recommendation).

We’ll start with an unmarked chart of TLT. The ‘bloodbath’ referred to in the link above, is yesterday’s down-draft.

Steven Van Metre has already laid the fundamental groundwork (for about a year) on why bonds will rally.

We’re there now but the market’s not going to let anyone get positioned long easily.

The next chart shows how the Weis technique can be used to get aboard the rally.

Yesterday’s so-called bloodbath, is really a trade entry set-up.

Notice how the market does not come back to the ‘entry’ levels. This chart fits the Weis example to perfection.

The bond market’s signaling there’s something very wrong with the ‘reflation’ or ‘re-opening’ trade.

The reflation, re-opening does not exist.

The economy is not coming back.

Summary:

It took over twenty years of searching to stumble across the Weis video. As with a lot of things in life, it was almost by accident.

After watching him dissect the ‘Apache Spring’ (APA) trade, it was obvious the search for ‘truth’ had ended; the education was about to begin.

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.

Random Notes

The usual suspects for the week

No. 1

The market does not ‘have’ to do anything.

Here’s a link to a Zerohedge report letting us know why the market ‘has to cover shorts‘ and move higher this coming week.

The reason retail money managers, pundits and the financial press don’t focus on price action and volume (a life-long pursuit of mastery), is because it’s hard.

As the late David Weis said:

‘There’s a lot to this game of reading the chart.’

Just as Steven Van Metre has drilled down into perfecting his style of bond ‘macro’ management, so too has this site drilled down into the nuance of volume and price action.

That in turn, is coupled with the externals (the ‘macro’, if you will) of sentiment and fundamentals.

It’s more art and intuition than science.

That’s a good thing.

The pointy headed ‘quants’, can’t quantify intuition.

The market (which is thinning out as we speak) may indeed rise this coming week. However, if it does, it won’t be because it ‘has’ to.

No. 2

The ‘knock at the door’

Awaken With JP has a humorous but educational approach on how to help those who want to ‘help’ us.

No. 3

Get the ethanol out

Here’s a brief video on how to get the ethanol out of gasoline.

Once that’s out, you’ll need octane boost. This seems to be highly rated stuff.

No. 4

Grow and store your own. Food, that is.

In this report from iceagefarmer, the picture at time stamp 10:27, should dispel all illusion. ‘Shaking hands with Klaus’.

At time stamp 16:02, notice how many farmers have been notified.

Once awake, anomalies like these ‘numbers’ are spotted instantly. It serves to remind us, who is ‘of this world’.

My kingdom is not of this world

No. 5

Brew your own. Beer, that is.

At this point in time and with global shutdowns on the horizon again, maybe we just brew our own.

I have purchased the exact kit shown in the link.

Report on the results to follow.

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.

Deep Dive: Gold Reversal

Gold Miner’s GDX

Fibonacci Projection

Rule of Alternation

Wyckoff analysis was used to identify the GDX up-thrust, reversal condition.

Nine trading days later, GDX is down a stiff -11.7%, from the analysis location.

It’s down -14.9% from its interim high set on May 19th.

What happens next?

This site offers a different perspective (more thoughtful, perhaps) than ‘stacking’ precious metals as high as possible.

Thoughts such as, major infrastructure disruptions (and more) are likely:

That includes nationwide power outages, food transport interruptions (or cancelled outright) along with massive ‘speck’ injected casualties (estimated past 100,000), see this report.

The very last thing you’ll need in that environment, is a stack of metal (not advice, not a recommendation).

Personal anecdote, skip to GDX Chart, if not interested.

These updates are originating from the North-Central area of Texas (DFW). When the historic cold snap rolled through this past February, the power went out repeatedly.

The first thought was not: “I’m sure glad I have my stack of silver to get me through”

No. The thinking was (in this order):

Food, water (water was second as there was plenty of it just outside as snow), munitions and ‘delivery mechanisms’, cash in case the gas station was operational … which is was not and then lastly, heat.

The location was using natural gas for heating and was available as long as there was power

Precious metals were nowhere on the list … not even considered. They had nothing to do with the situation at hand.

Precious metals come later … after the famine.

GDX Chart:

The original analysis from June 8th, is below:

Subsequent trade action (including the original notes):

Weekly chart showing Fibonacci downside projection to level(s) mentioned frequently by Steven Van Metre.

In the chart above, note the choppy action leading down to the most recent upside pivot (early March). That area expanded below:

If we’re in a reversal to much lower levels, the market tends to alternate.

It was choppy and overlapping action from the highs in August of ’20 to the March ’21, low.

Thus far at the pivot high in late May, its been essentially straight down.

With the planned outages discussed above, precious metals may become (temporarily) irrelevant.

If or when that happens, it may be time to consider a ‘stack’.

Of course, by then, no one will want to buy (and spend their worthless fiat cash) for risk of starving to death. This is how markets work.

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.

Deep Dive: Biotech

Biotech Reversal

Downside Projections

Nuremberg 2.0

For what seems the longest time, a recurring focus of this site has been the biotech sector.

Specifically, the IBB (ETF) and SPBIO (Index).

There’s good reason for that. In this update, we’ll go deeper into the downside opportunity.

Biotech Reversal:

SPBIO, topped out on February 9th this year. The IBB (ETF) topped one day later.

Both went on to form a Quarterly reversal bar; indicating a long term change in character.

Of the two, SPBIO has showed more weakness having posted monthly lower lows for three successive months.

That relative weakness over the IBB index, has resulted in focusing on the inverse of SPBIO; specifically the 3X inverse, LABD.

Working with leveraged inverse funds is only profitable on a short-term basis or when the underlying index is in a persistent down-trend.

Otherwise, typical market chop results in value erosion of the inverse fund (not advice, not a recommendation).

For the reasons discussed in the last section below (Nuremburg 2.0), we’re anticipating the index to have a sustained and persistent drop to much lower levels.

Downside Projections:

Going way back to Reminiscences of a Stock Operator and the Wyckoff Stock Market Institute training materials, both in their own way indicated a speculative position was only entered if there was sufficient potential.

Livermore’s 10-points or more and Wyckoff’s cause and effect

In Wyckoff’s case, the ’cause’ was price action congestion built up in the P&F chart.

The ‘effect’ was the resulting move.

Which brings us to now:

Many times on this site, we’ve said biotech has built up congestion in a way, when it reverses and begins its decline, price action itself will create lower targets.

We’ll present two charts showing how that’s happening.

The first P&F chart in this update and provided below, has a projected downside target for IBB around, 116 – 120 area:

Note, the downside is not to scale as the real location is far below the noted area.

Biotech IBB, then went on to post lower action. That in turn has resulted in an updated downside target:

Once again, the downside is not to scale.

It’s apparent, as IBB heads lower, it successively builds lower targets and it’s only (potentially) just getting started.

The weekly chart of IBB below, spells it out:

If and when IBB price action gets to the initial targets, it enters a congestion area that will (by that time) be over seven years wide.

If the trend is still down, that congestion in turn would target even lower levels.

The “-80%” interestingly enough, comes from a quote by Steven Van Metre at this link.

That 80% drop also corresponds to a downside Fibonacci (not shown) projection of 423.6%, on the above chart.

Nuremberg 2.0

This phrase has become so ubiquitous you can do a search for it.

So far, not a single mainstream financial site or YouTuber (still on that platform) has mentioned this fact in their analysis.

The speck injections are mass genocide and intended as such.

Two recent events resulting from injections are here and here.

If all of a sudden, injected pilots can’t fly (the first link), how are goods going to be transported?

Not generally known to the public, commercial air-transport is also used to haul freight (while carrying passengers).

Exactly how all of this (world crime) will break is unknown.

If and when it does, the result in the biotech sector as well as equities in general, could be successive air-pockets all the way down.

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.

Dollar Divergence

9:51 a.m., EST

Everyone loves to hate the dollar.

That sentiment extreme is a set-up … for the bulls.

If the UUP dollar index ETF, manages to push below the 24.00 – level, it presents the opportunity for a significant bullish divergence.

As Van Metre has stated many times over the past few months, the market’s not expecting, and not in position for a dollar rally.

How can it be … with the rabid gold bulls thrashing about with each upward blip in GLD, GDX and GDXJ.

From this site’s perspective, we’re staying away from that (gold) market and have focused on biotech … where things are really getting underway; but now, back to the dollar.

The weekly chart of UUP, shows the potential set-up.

If somehow we get a (narrow range) push below the 24-level, it would set up a clear bullish divergence on the MACD.

At this point, anything can happen.

Saying that gold will crash if the dollar launches upward is certainly possible. However, in today’s world, the opposite could happen as well.

Just one more reason to say away and focus on shorting an index that’s decisively moving lower: Biotech (not advice, not a recommendation).

Side Note:

The whole ‘divorce’ thing, you know what I’m talking about, could be a signal in disguise.

The ‘higher ups’ may have decided our cardigan wearing benefactor has reached the end of usefulness.

If so, how many biotech rats are now going to jump ship (before the paddy wagon arrives) knowing the jig is up?

Could that be why SPBIO, posted new lows in five time-frames; Daily, Weekly, Monthly, Quarterly and Yearly, last week?

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.

Gold (GLD) Hits Target … 166

Bring out the usual suspects.

Last month, March 13th, had this forecast for GLD, to retrace at least to 166-area; a Fibonacci 23.6%, level.

So, here we are.

GLD closed last Friday, at 166.35 … close enough.

Before we get to the chart analysis, we have the following summary from the video link in the header line:

‘We were seeing some noticeable improvement in the economy … especially in the U.S. as the [speck protection] took hold.’

(time stamp 5:03).

‘Taking hold’, indeed.

We can see just how well that’s going, here, here and here … adding to a very long list.

Before we leave this topic, we have entire school districts being shut down from speck protection reactions.

Let’s extrapolate that into ‘entire grocery chains shut down’, or ‘entire air transport companies shut down’ and the picture is clear.

By now, anyone with two lipids rubbing together can see the false narrative has reached beyond absurd into a completely different realm.

We’ll just have to call it the ‘Twilight Zone‘ for lack of a better description.

All of this will affect the markets … gold included; probably in ways unknown at this point.

Analysis:

So, here we are at the 23.6% retrace. What’s next?

First off, 23.6% is very weak. It’s not typically seen as the final (upside) reversal point in general market behavior.

However, if GLD does reverse from here, posting new daily and weekly lows, it’s in serious trouble.

The next chart has GLD in a downward channel that’s been in-effect since last August.

Pulling out to a longer time frame … the monthly; using a Fibonacci projection from these levels we have some interesting price targets.

Frist, is the 1:1, or 100.0% – 100.0% on the Fibonacci tool that projects GLD down to about 130 (129.64). This just happens to be the area Steven Van Metre has been discussing (as a potential target) for months.

Moving on lower to the 69.25 area for GLD, are targets mentioned by Harry Dent … albeit, years ago (actually, it was below $400).

We should keep in mind, a Fibonacci retrace of 76.4%, from all time high to cycle low, 1999/2001, is the 64-area on GLD.

Getting below $400 at this juncture seems unlikely.

Summary:

A downside reversal off 23.6% retrace would signify substantial weakness.

GLD would have to push below last week’s low of 161.81, to increase probabilities of a sustained downside move.

Stated many times on this site, precious metals are a crowded trade.

Operating at the same time, adverse reactions (and death) being caused by speck protection. A massive number of the population is subject to being permanently debilitated.

That could feed into the availability of all items; gold included but more importantly, the food supply.

To wit, CORN has just pivoted to the up side in a new trend; rising at over 437%, annualized.

More on that, later.

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.

Elliott Wave: American Tower

Paul Harrell likes to start his videos with:

‘The next twenty minutes are going be long and boring. You might want to skip to the end to see the conclusion.

His rabid and loyal fans then proceed to hang on every word of his self professed ‘boring anecdote’ until the very end.

Not saying this site’s in the same league as Harrell’s.

Just saying, the following is going to be a tedious discussion of American Tower (AMT) and how it just might be ready to start an Elliott Wave III, down.

Market Extremes:

Its been no secret. The markets are at price levels and valuations never before seen.

In this site’s opinion, going long anything, is insane.

There could be a break, upset, world event, container ship run aground (oh, wait…), cyber attack, volcanic eruption (oh, wait …), major earthquake, nationwide weather freeze (oh, wait…) food supply disruption (oh, wait…) bond bear raid (oh, wait…) currency devaluation, or any myriad of disconnects that would instantly change the dynamic.

Change the dynamic in such a way as to make low-risk long exit, or short positioning impossible.

This site has documented several times where major brokers have already gone off-line as a result of markets fluctuating to the upside.

What happens when it turns down? Good luck getting out.

Looking for the (short) entry:

Its been an on again, off again, and back on again affair with shorting real estate, IYR. Anecdotal evidence such as Jerimiah Babe’s updates from his area, show the market’s been vaporized and is not coming back.

We’ve shown from a Point & Figure chart perspective, IYR has built significant price action congestion.

In Wyckoff terms, congestion equals potential.

The IYR index has built enough congestion that if/when the reversal comes, price action has potential to decline below the 2009, lows.

American Tower (AMT) Symmetry:

Now, for the analysis of AMT.

We’re going to start with the daily chart which has an interesting pattern of equal distance moves (or waves):

This equal move structure gives a hint that something’s up. The market’s moving in an orderly fashion. But what order?

To add more intrigue, we’ll go to the weekly chart. We see each retrace of the two initial waves, was Fibonacci 62%.

The last retrace (up to Friday’s close) is essentially 100%.

Looking up Elliott Wave “equal waves” turns up this presentation. It helps some but does not cover the current situation. The take away from the video is that equal waves do occur.

Looking at the daily close chart of AMT gives us this:

The Wave 1, down is placed at the low extreme. Price action then corrects to pivot (magenta oval) at the Fibonacci 38.2% retrace level.

It’s a near perfect retrace.

The reason to think AMT just finished a complex correction that terminated at “z” which is also “2”, is the structure of the fifteen-minute chart below.

The first chart is unmarked except where price action changes character:

Then we put in the Fib projection tool at that location; the inflection point, to get the following:

Incredibly, the top of Friday’s price action is also a Fibonacci target (423.6%) projection.

Getting back to the daily chart and labeling it using the above information gives us this:

Removing all but the labels is more clear:

There could be other ways to label the structure. It may become (very) apparent at the next open whether this interpretation is correct.

However, coupled with yesterday’s analysis of IYR, and its technical condition (at the extreme), we get the sense we’re close to some type of price action hesitation or outright reversal.

Summary:

We’re short this sector via DRV (not advice not a recommendation).

Price action appears to be at extremes and is meeting Fibonacci and support-resistance levels simultaneously.

Not related but an interesting coincidence (maybe): Van Metre’s update on Friday night:

“Is This a Sign Real Estate Prices Have Peaked?”

The futures markets just opened … S&P down 7-points. Let’s see what happens next.

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.

Early or Late?

It may have been Robert Prechter Jr. that said years ago;

‘You’re either going to be early, or late’

He then went on to say his trading method usually puts him in a little early on the move.

That means there are times when the anticipated direction does not materialize.

So, your either suffering through the pain of anticipated reversal (for seconds, minutes, or days), or you’re chasing the market.

You make the call.

There really is no other choice.

Both methods involve psychological pain.

Referring back to Prechter, he also said some of the best traders he knew were former Marines. By definition, they are well trained to deal with pain.

My former mentor, the late David Weis would say after hit on a set-up, if conditions warranted, he would enter again; as he told me, he would ‘stick his chin out’ and effectively tell the market to ‘prove him wrong’.

It was an interesting choice of words for him as one can see from his training video …. he had a distinctive chin.

Trading Style:

The trading style presented on this site is a combination of Wyckoff tape reading coupled with anticipating price action.

As inferred above, that means there may (and will ) be times of draw-down while working to enter a market reversal.

That’s where we are now.

Trade Actions:

Yesterday’s upward action in basic materials forced the ‘project’ out of its short (SMN) position. That sector may attempt to make a new 52-week recovery high before it’s ready for reversal.

Analysis: Real Estate, IYR

One market that did make a new 52-week high, setting up technically for a short, is real estate:

The weekly close of IYR has been inverted (turned upside down) to show the unique technical condition.

IYR has created a large terminating wedge that’s in the process of a ‘throw-under’. At times a market will attempt to breakout of a wedge in the opposite direction of eventual reversal.

This type of breakout tends to fail. Based on the dashed line contacting a prior congestion, there’s’ potential to at least hesitate in this area.

The daily chart below provides additional nuance:

It’s clear price action has contacted two prior areas of support – resistance during ‘throw-under’.

Anything can happen but it seems that IYR’s at maximum extension.

On Friday, IYR price action closed just 0.05-points off its high for the day. That high was also a 52-week high.

We’re now in a support-resistance zone.

If IYR is to move significantly higher, it might need additional fuel (a retrace lower) to break through.

Positioning:

The action then (not advice, not a recommendation) was to short the market via DRV.

Once again, the market itself is telling us where to go for opportunity.

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.