Failed Rally Attempt: Real Estate

Nothing gets sharks in the water faster, than a failed move.

Last Friday, real estate IYR closed below support (black line). Doing so, put itself in Wyckoff spring position.

‘Spring position’ is a technical condition of instability where price can reverse dramatically.

At the open yesterday, that’s exactly what happened. IYR launched nearly instantly to a 50% retrace.

From there it was a long day of moderate price erosion all the way to the last hour; then it all went south.

IYR closed just 0.22 points higher or +0.25%, after being as high as +1.73 points (+1.98%), early in the session. In addition, that close was back below support on the heaviest volume since February 2nd. … another bearish sign.

We can see momentum, MACD has exhausted itself and posted numerous bearish divergences.

On the fundamental side, just in the past 24-hours, there’s been a raft of news articles posted showing commercial real estate’s in serious trouble.

A short list of what has been found is below:

Mortgage market.

Mall values crash.

Bond tipping point.

Bond market calls Fed’s bluff.

U.S. Spending plummets.

Rising yields are now good for the markets?

IYR could still rally from here. However, with the conditions described in this post, it’s not likely.

Summary:

We’ve been short this market in a big way (not advice, not a recommendation) via DRV. The plan is to increase position size as long as price action allows low risk entries.

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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.

Trading Tip: Trailing Stop

Here’s one method to use for a trailing stop; Have the market itself tell you were it goes.

The reason brokerage trading platforms have so many options with an endless list of indicators, is that’s what the (retail) public wants.

It has nothing to do (as usual) with what works best.

Wyckoff himself said the market defines the course of action. The “tape” as he called it, was the master for decision making and no other.

Let’s look at what the tape is saying about LABD, the 3X inverse EFT of Biotech (IBB).

The sector has already been traded profitably last week. Shown on the chart below is another entry. Also shown, is what may be the most efficient method for stop placement.

For LABD over the prior weeks, we could have extracted a large part of its move using a trailing stop based on the 4-Hour chart.

LABD itself has defined that 4-Hour looks best at this point in time.

So, that’s what we’ll do (not advice, not a recommendation). The stop will be at the nearest 4-Hour low (currently, 16.27).

At mid-session today, we’ll move it up to the next 4-Hour low and so on until stopped out.

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.

Miners, GDX Accelerates Lower

With GDX posting a new weekly low (below 33.23) early this session, it’s helping to confirm a pivot and acceleration to the downside.

Bullish or bearish, it’s a crowded trade that we’re avoiding (not advice, not a recommendation).

It took over a week of oscillating price action before GDX decided to post below the February 4th, low.

Even so, when an established low is penetrated, it puts the market in “Wyckoff Spring Position’.

That means there’ll (potentially) be some type of rally or rally attempt. If that happens, it’s just more oscillations that result in erosion of leveraged inverse funds.

Other areas of the market are performing better on the downside. Real estate IYR, looks like it may post a narrow range day (as of mid-session).

It’s typical action when at support. If there’s no break lower today, then IYR could make an attempt higher at the next session.

Based on previous analysis, that attempt (if it occurs) is expected to be short lived.

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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.

Silver Short Squeeze, Over

Massive volume in SLV, points to significant reversal.

Not since the week of May 13th, 2011 has there been higher volume.

The week prior in 2011, was the highest volume ever, for SLV at 1.1-Bilion shares.

Those two weeks culminated in a crash over -31% and were just after SLV reached its all-time high.

Total down-draft for the three weeks combined (the top and two weeks following) was nearly -34%.

Will it be any different now?

Probably not.

At this point, it’s important to re-state, this site is following principals and techniques set down by three market masters of the early 1900s; Livermore, Wyckoff and Loeb.

Markets do not change. Using the techniques outlined by those early masters are still applicable today.

Arguably, the father of technical analysis was Wyckoff.

The terms “accumulation, distribution, support and resistance” originated from him.

His technical publications had the largest subscriber base in the States at the time; larger than all other publications combined.

At one point he got so successful, his buy or sell recommendations were beginning to move the markets all on their own. The year was 1918.

Instead of stroking his ego on how ‘his recommendations’ were affecting the markets, he saw it as a disservice to his clients.

In May of 1919, he discontinued his newsletter publication ‘The Trend Letter’. It had become so popular, it was impossible to provide recommendations without those same tips moving the market.

What a contrast to today.

Those attempting garner forces (the little guy) to move the markets, such as silver, will find out soon enough who’s in control … and it’s not them.

It’s unlikely silver is going higher any time soon. There could be some upward spasms as the crowded trade exhausts itself; it’s likely we’ve seen the SLV highs for quite some time.

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.

S&P 500: Trend Break, Test

Yesterday, the S&P tested its trend breakout and then reversed.

This morning’s pre-market action is down again.

The teminiating wedge is clear. Then a decisive break with an upward test. Late in the session that test was rejected and the market headed lower.

That scenario could have easily been from 1931’s stock market action, not 2021.

Buried within the Wyckoff training course material (first published 1931), available here, is a statement to the effect:

‘When a market breaks a trend decisively and with volume, there’s nearly always some type of rally to test the break.’

That’s exactly what we got yesterday. Now, the S&P (SPY) is in a wide pre-market range but essentially trading lower.

A terminating wedge is typically the last stop in a move; whether it’s up or down.

The S&P could of course rally from here. At this point, probabilities favor lower; at lest to a measured move target in the vicinity of 368, for SPY.

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.

Was That The Top?

“If the market (S&P, Dow, NASDAQ) opens lower tomorrow, Friday and continues decisively lower, we might add Tuesday, November 24th, 2020, as another empirical data-point for Holiday Turns.”

The quote above was from last Thursday’s update.

Well, it looks like the market waited one additional day to make its turn.  For the Dow 30, last Tuesday the 24th, was indeed a high.

We’ll see how far this one goes.  It’s a high but whether or not it’s THE high is not known.

Given the market conditions being reported on this site, long positions look tenuous indeed (not advice, not a recommendation).

The ever helpful, knowledgeable financial media says ‘it’s the best month since 1987’.  No elaboration on that one is necessary.

The takeaway is, understanding that market pivots tend to occur during a holiday week … when no one is looking.

In other markets, gold (GLD) continues lower and is attempting to take the miners (GDX) down as well; currently oscillating near unchanged.

Biotech pushes into its breakout but at this juncture (11:53 a.m. EST), it looks weak and may not have energy to get to a new all time high.

It should be obvious the manipulators are hard at it … attempting to get the sector (IBB) to move high enough for gains on the long side, then turn around and establish low risk short positions.

Wyckoff noted that under such conditions (exit longs, enter shorts), daily volume will be two-to-three times greater than typical.

Chart of DIA is below … showing reversal since last Tuedsay, the 24th.

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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.

Revelation 6:6

When a stock market trader starts quoting Revelation, you know it’s bad or about to get that way.

That’s what we have here (time stamp 14:20) where David Dubyne and Bob Kudla discuss a variety of events but mainly, the world’s food supply.

“And I heard a voice in the midst of the four beasts say, A measure of wheat for a penny, and three measures of barley for a penny; and see thou hurt not the oil and the wine.” Revelation 6:6

This site has presented in past updates sufficient data to show the nation’s food supply is being systematically dismantled via at least two avenues.

First:

Naturally occurring disasters are intensified (or outright created) by weather manipulation. 

Second:

The planting and harvesting infrastructure is being intentionally disrupted or dismantled by what this site has termed ‘the speck’.

By now, anyone accessing these posts should know what the (imaginary) speck is and it’s even discussed in the above links. The press (financial and mainstream) talk about the speck incessantly.

Put the lie out there long enough and eventually it will become belief.

Back to the markets and more specifically, CORN

CORN was a trade that was entered by the firm but then decided the look was not right and exited at essentially break-even.  That trade was entered right around the area that’s now labeled as a 38% retrace level.

The trade would have been modestly profitable but it’s not what we’re looking for. What we’re looking for may be yet to come.

The 38%, retrace level is now well established support and if penetrated by subsequent price action would generate a reversal condition known as a Wyckoff spring.

Shown on the chart as well, is the wide high-volume price bar that’s right in the middle of the 50%, retrace level.

This is where it gets interesting.  Markets behave in such a way as to come back to high volume areas for a test.

If somehow, CORN retraces to this level for a test of the wide bar, it will automatically set-up a spring (reversal) condition by penetrating price action at the 38% level.

Our edge in this situation, are the bullet items discussed above.  The entire world’s food supply is in jeopardy.  That’s a known fact.

Crops are failing world-wide.  Weather patterns are erratic and manipulated. 

Knowing this provides a fundamental backdrop that should CORN retrace to test the wide bar, it’s not likely to stay there long.

In addition, if CORN reaches the 50% area, it may never come back to those levels.

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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.

Before The Open

As expected from the November 1st, update, gold pre-market shows a gap-higher open.   Trading is around 178.80 – 179.00 which is a little above the resistance area shown in the original chart.

After the first hour of trading, the plan is to provide an update to see if there’s still a possibility of a reversal at this juncture (not advice, not a recommendation).

Correspondingly, the mining sectors, GDX, GDXJ are up in pre-market with inverse DUST and JDST, down. 

However, the big hitter, NEM is right at a 50% retrace off the lows of October 28th.  This is a possible area to stall and potentially resume a downward (or sideways) trend.

Other market actions that may have significant impact on silver/gold, are the four-standard deviation in the bonds to the short side.

As Steven Van Metre indicates, none of us reading this (in our lifetimes) are likely to ever see a set-up like this again.  It’s an historic extreme.

Bonds are down in pre-market along with the dollar … using UUP as the proxy.

The dollar has bottomed and is now in position to rally; completely opposite the established consensus.

At least twice now, Van Metre has mentioned Wyckoff in his updates.  He appears to be well aware of the significance.

In other markets, a position was opened in nat-gas, UNG at the last session.  That position was closed in the pre-market session with a slight ding of -1.2% to the managed account.

Even with record cold hitting large portions of the country, nat-gas can’t seem to get going to the upside.  Now, with its current action there may be a probability of lower prices (or stagnant action) going into winter.

We are leaving nat-gas alone for now and focusing on the historic bond set up and the potential effects when it all unravels.

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 Squeeze Is On

Pre market activity (8:31 a.m. EST) has TLT trading up +0.74, at 161.29, which is above the target level set in the last update.

We’ve already laid the groundwork for the ‘speculator’s’ short position in bonds as the largest in history.

It’s the ‘commercials’ that know their markets and in this case (according to Steven Van Metre), the commercials are the banks.

Isn’t it interesting. The banks always get their money, right?

Well, that may be about to happen now, as well.

Just a quick digression from today’s update and concerning the Van Metre link above. At time stamp 14:29, he shows a Wyckoff accumulation schematic. Nice.

From a trading standpoint, there are leveraged bond funds such as TMF (not advice, not a recommendation).

However, this firm has never traded that vehicle and is choosing to be short the junior gold miners (JDST) as well as long natural gas (UNG) for its current positioning.

Natural gas (UNG) for a seasonal trade … with some potential supply disruptions thrown in; the Junior Gold Miner short position (JDST) to work the ‘deflation’ side of what’s going on.

Reports here and here, provide documentation on the thinking behind those positions.  Searching for UNG and JDST will give the full gamut of research.

Back to the markets. If we’re doing our job right and there’s a huge down-draft, we’ll already be in position to profit as a matter of course.

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.

Newmont Mining (NEM) Reversal

Newmont Mining (NEM) is the heavy hitter. 

Newmont’s in the Senior Mining Sector GDX with a market cap that’s equal to the next six mining operations combined.

If Newmont has reversed, the entire sector is likely to follow suit.

At this juncture, that’s exactly what’s happened. 

The chart below shows a weekly MACD bearish reversal in-effect.  In-effect means the technical indication is correlating with the price action result.

Newmont appears to have made its high and is now heading lower.

Of course, the gold miners reversing and heading lower is completely opposite the established narrative.

Price is always the leader.  Price action in NEM has probabilities pointed to the downside.

So, how will we know if the direction changes and resumes an up-ward course?  What price level must be reached to negate the current reversal scenario?

Since we’re right at the edge, the danger point, small fluctuations change the outlook significantly.

Recall in a prior update, the quote from Wyckoff that effectively said:

‘At pivot points, price action can go either way.  It’s as if the weight of a feather can determine the next likely direction.’

That’s where NEM is now.  Price action is tight.  The picture changes to the upside if we get a push above last week’s high:  NEM, 64.33.

That’s just 1.66, points, or a 2.65% move from were NEM closed last Friday.

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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.