Livermore, Wyckoff, & Loeb

Buffett’s not on the list

After thirty-four years of researching the markets, focus has narrowed to three masters from the early 1900s; providing a solid framework for addressing the markets of today.

More detail on these masters can be found at this link.

Summarizing their knowledge as follows:

Strategy, Tactics, & Focus

This update demonstrates how those tenets are being implemented.

Strategy:

In Livermore’s fictional autobiography (Reminiscences), he muddled around for years before identifying his niche.

That is:

‘What’s going to (or what’s likely to) happen in a big way.’

That insight has been used to identify the biotech sector as ripe for complete (and well deserved) implosion; more so than any other sector in the market.

For many months, the case continues to build for collapse.

Here’s just one more brick in the wall; providing even more support for implosion.

Tactics:

Wyckoff committed his entire professional life to decoding the market and its moves.

He is (as far as available data shows) the father of technical analysis.

Terms like ‘support’, ‘resistance’, ‘accumulation’, ‘distribution’, did not exist before is treatise, “Studies In Tape Reading”, published in 1910.

His bottom line:

Price is moved by a force of its own; having nothing to do (in a causal way) with fundamentals:

‘What is the market saying about itself.’

The biotech sector SPBIO, is tag-teaming with gold miners GDX (and GDXJ), for downside leadership.

SPBIO finished the week down -27.5%, from its February 9th (2021) high; running a close second to GDX, which finished the week down – 27.6%, from its August 5th (2020) high.

From a speed-of-decline standpoint, biotech’s in the lead.

Focus:

Loeb’s brutal admonition was: ‘The naïve, lazy, mediocre, ignorant and the incompetent “diversify”.

His follow-on corollary was: ‘Real market opportunities are few. If one is discovered, it must be used to its maximum extent.’

Loeb’s assessment of those in the market, is not much different from Wyckoff’s:

“The average man never makes a success of Tape Reading.

Right you are! The average man seldom makes a success of anything.” (emphasis is Wyckoff’s).

From the above list, ignorance can be fixed through determination, study, tenacity and the never-ending search for (market) truth.

The others, not so much.

Using Loeb’s tenet, that is, ‘focus’, we’ve taken it and have gone short and continue to go short (not advice, not a recommendation), the biotech sector via LABD.

Summary:

There’s no guarantee the short trade will work out; yielding a significant gain.

Any number of things can happen:

Internet outage, power outage, terrorist attack, supply chain and transportation shut-downs … literally, anything.

However, being short (from a personal standpoint) is better than wringing one’s hands, cowering in fear, looking to the (bought and paid for) financial media to provide direction on what to do in this unstable environment.

Epilogue:

By using the life’s work of Livermore, Wyckoff & Loeb, its been determined, being short biotech (and possibly the mining sector) is the appropriate market stance.

With the caveat that even now, one might need to exit the trade; it still appears at this juncture, the on-going short (not advice, not a recommendation) is the most focused profit opportunity given the current environment.

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.

Random Notes

The usual suspects for the week.

No. 1

Let’s start with some comedy

The tree frog on the little boy is the best.

No. 2

So now, it’s ‘Monkeypox’

Of course, it needs to be in Texas

One has to wonder if the Oligarchs are going to make an attempt at lockdown … for our protection. Or, maybe it’s ‘for the children’.

Here’s just a little reminder of how small town Texas deals with community organizers.

Time stamp 0:13.

Hey, I’ll bet you I went to a better school than you went to.

I went to Berkeley, they didn’t screw my mind.’

You can’t make this stuff up.

At least in this town, the police are still protecting the citizenry.

Just think about how pissed these ‘Bubba’s’ are going to be when they find out Trump is part of the cabal as well.

No. 3

The boy that cried ‘wolf’

Nobody agrees with everything Jerimiah Babe has to say.

If you’re watching his videos, then you’re there to get some additional insight.

Comments to his uploads are usually friendly and complimentary … or may have a suggestion or two.

However, when you see something like this, it’s the mark of the unprepared; possibly one who’ll be an early casualty in the coming troubles:

But as the days of Noe were, so shall also the coming of the Son of man be. 38For as in the days that were before the flood they were eating and drinking, marrying and giving in marriage, until the day that Noe entered into the ark, 39And knew not until the flood came, and took them all away;

Noah spent anywhere from 55 – 75 years building the ark (now resting at the base of Ararat).

It was probably good sport to go down and hurl insults (like that above) … after all, nothing’s happened … yet.

No. 4

Plan, Prepare, then Win

Zig Ziglar probably said it best:

‘First, you have to plan to win. Then, you have to prepare to win. Then, you have to actually do the winning.’

The David Weis story from yesterday, is an example of implementing this approach:

First, I planned to win (being mentored by Weis):

The Plan:

What was going to be required to not be dismissed out of hand as unsuitable material.

Dr. Elder (a friend of Weis) had already shown that getting into a trader camp was an application/approval process.

Therefore, getting an audience (with these professionals) was not a done deal … it didn’t matter how much money you had.

I set out to educate myself as much as possible on Weis:

The Preparation:

Weeks before I sent off an e-mail asking if he still provided mentoring, I had memorized his part of the Elder video. Watching his section at least 20-times or more.

I also searched the internet for any technical articles he had published. I came across (and purchased) a two part series on Wyckoff and trading bonds.

That article had appeared in Stocks & Commodities Magazine in the early 1980s.

I purchased the Wyckoff Trading Course that he discussed in the video. My e-mail to him included those facts.

I had done my homework and was serious about the craft.

There’s no doubt, the up-front effort increased my chances of ‘passing’ the interview.

I was prepared to win.

The Winning:

Yesterday’s anecdote is proof of the actually winning.

Towards the end of the mentoring series, Weis asked me if I would give up my spot for others waiting in line.

I did and the sessions were never completed. That’s a story for another time.

No. 5

Ahead of the pack

The anecdote above brings up an important fact that’s also repeated in videos from Jeremiah Babe and Dan, iAllegedly:

Be ahead of the pack.

It may be the entire system of ‘woke’, along with supported and protected stupidity (disguised as ‘diversity’), is about to collapse in on itself.

If so, it will be messy and chaotic.

Being ahead of the pack gives you options. You can take action while no one else is around. There’s no apparent alarm.

Preparations can be performed more easily and without the stress that comes from running with the herd.

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.

Psychologically Unprepared

11:43 a.m., EST

When the break comes … it’s not coming back

Nearly 100-years ago, Wyckoff, stated:

‘If you can’t completely ignore the news and the financial press, you will never be successful in the markets’ (emphasis added).

In line with that, we have this: The very first sentence from this article out of barchart is questionable to say the least.

First:

There is no rapid ‘re-opening’. There never was. There is no ‘pent up’ demand.

Massive credit card usage shows the U.S. consumer has been decimated; using credit just to survive.

It should be (but somehow for some, it’s not) obvious we’re in a controlled demolition of the economy (including the food supply) on a world-wide scale.

Second:

Price increases are the result of supply chain (also, controlled demolition) shutdown not inflation.

Uneducated Economist has probably done the best job of ‘boots on the ground’ work to completely dispel the inflation false narrative.

He called the current and now waning lumber price spike two years ago. That’s how you know who to trust or believe. Take a look at their past analysis and see how it ‘aged’.

Third:

The U.S. population collectively, has never experienced real hardship. Those who made it through the Great Depression have all but died off.

There is no one around to give said population a swift kick in the pants and tell them to ‘suck it up’.

Northman Trader

Sven Henrich has come out with an excellent market update, linked here.

Towards the end of his analysis he states; ‘when the break comes, it will be quick, deep, keep going and most (if not nearly all) will be psychologically unprepared.’

Which brings us to biotech.

LABD Analysis:

Biotech SPBIO, is back as downside leader: Down just over -25%, from its highs in February, this year.

The daily chart of (inverse fund) LABD is below. The market itself is showing us it wants to follow the repeating pattern of trendlines (not advice, not a recommendation).

If the entire structure (from the February low) is actually a trading channel, it’s hard not to overuse the word ‘massive’.

Non Confirmation:

As of this post, the Dow, the S&P and the Composite are unchanged to slightly higher. Yet biotech SPBIO, is down -1.2%.

We won’t know until it’s all over … but it looks like biotech could somehow be the catalyst (along with the dollar and gold?) that precipitates the final reversal in the overall 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.

Biotech: Now, It Gets Real

Biotech reversal

No one is looking

The only way for price action to even hope of printing a Fibonacci series (daily chart), is when virtually no one is looking.

A quick YouTube search of “Biotech analysis“, turns up these links:

Best Biotech Growth Stock to Buy Now?? : Vertex Pharmaceuticals (VRTX) Stock Analysis

3 Cheap Biotech Stocks With 100% Upside in 2021

Biotech analyst on CRISPR technology: Early data is very promising

Those three, are the most recent.

Looking at each, none of them even hint things could go wrong.

To be really cynical (and probably correct), the senior trading professionals may know this sector’s at risk of implosion.

They task junior employees to cover it; attempting to talk it up.

Analysis: SPBIO

Moving on to inverse fund LABD, we have Fibonacci correlation on two time frames:

In addition, from a Wyckoff standpoint, we’re in spring position on the weekly and daily time frames.

All of this points to high probability (not advice, not a recommendation) that biotech and specifically the weaker SPBIO, has pivoted to the downside (LABD higher).

Naming Names:

A couple of days ago, we had Dr. Yeadon (former Chief Scientist, Pfizer) absolutely grilling and eviscerating his interviewers, covered here.

Then, we have Dr. Coleman deciding to name, names.

Now, it’s getting real.

With this type of high-level pressure being applied from internationally known and respected (real) heroes, one has to think, it can’t be long before the lie is fully exposed; blowing the entire sector, wide open.

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.

Dow Theory Sell: Update

12:51 p.m., EST

Upward Retrace To 38%

Downtrend To Resume?

It’s natural market behavior to rebound after a breakdown low.

Stops are hit; Amateurs sell and sell short. Professionals cover their shorts; go long or look to short again.

It’s what happens next, that’s important.

The market, DIA will likely come back to test the support/resistance boundary (blue line) in the daily chart above.

At this juncture, even though Dow Theory Sell was triggered (not advice, not a recommendation) with DIA closing below support last Friday, from a Wyckoff standpoint, DIA is in spring position.

Spring position; the market’s poised (but not guaranteed) to move higher.

If DIA comes back to test the boundary (typical behavior), there are two outcomes:

No. 1:

The test holds; price reverses and we’re on to potential new highs

No. 2:

The test fails; price re-penetrates the lows and then heads (much) lower.

Adding weight to the second scenario, DIA has already posted a new monthly low. That’s not happened since October last year.

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: 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.

Gold Channel … Down

10:47 a.m., EST

Contact points confirm channel

Gold (GLD) heading lower

The two hits on the right side channel line provide confirmation of the trend.

An expanded version of the daily is below:

So far, we’ve had the blockage of the Suez Canal. Auto parts being sent to the bottom of the ocean off Japan. ‘Mysterious’ grain silo fires destroying harvested crops.

But wait, there’s more. This just in:

A fire has destroyed the largest grease plant in the U.S.

If transportation is shut down as a result of cyber attack, fuel pipelines off-line, no grease to lubricate the wheels or any number of other (planned … and don’t think there’re not) events, the last thing that’s going to help get anyone through, is a ‘stack’ of inedible metal.

It’s no secret this site’s been using the Biblical precedent of Genesis 41.

That is: Grain and Corn come first … then gold and silver.

The ‘stacking’ public has got this message reversed. Of course, this is not advice or a recommendation.

However, for those that can see, it’s so obvious the goal is ‘controlled demolition’ of the supply chain. All of it.

We’ll put everything back to ‘normal’ if you just get injected.

Meanwhile, biotech IBB, and SPBIO, have both posted a new daily low.

IBB is poised to penetrate the resistance area identified in this update, and come back to test the wide bar.

If that happens, we have a Wyckoff up-thrust in play. More analysis of biotech to follow.

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.

Dow Theory Sell & Gold

9:23 a.m., EST

Dow Theory; Sell signal nears

Gold, in Wyckoff ‘Up-Thrust’ reversal

Even though the current environment is anything but traditional, the report at this link shows how close the market is to a Dow Theory sell signal.

It could be. Even with valuations and markets at never before seen extremes, the traditional theory will still hold.

Wyckoff analysis, developed during the same time as Dow (published in 1910), does not concern itself with ‘valuations’.

That’s the key

Wyckoff discovered early on, that ‘markets have an energy of their own’.

This ‘energy’ has nothing to do with valuations.

Gold (GLD) has been discussed several times over the past few weeks; that it has stalled and in potential reversal.

The weekly chart shows the blue line resistance area. Price action has struggled at this location for weeks.

Now, with the market about to open, GLD is trading down a solid -2.5 points, or – 1.4%.

If that level is held to the open, it puts GLD below the June 3rd (weekly) low and below the resistance area.

With all the inflation, and hyperinflation talk, GLD has not made it to new highs.

Last week, the dollar reversal was confirmed with UUP posting a new weekly high. At the same time, weekly MACD confirmed its bullish divergence.

The stage appears to be set for some kind of surprise; in the markets, the dollar and gold.

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.

Moderna: Reversal Review

‘Reversal at hand’ said the prior update

Reversal still imminent?

MRNA has pushed above resistance on declining volume (shown above) . The next chart has MRNA in a terminating wedge pattern:

Price action this past week has just contacted the top portion of the wedge.

MRNA is the fifth-largest cap equity in the IBB index. Its market moves have a definite effect on that index.

IBB, shown below:

On Friday, the market eased back a little. Will it come back to test the resistance area next week?

There’s no doubt about the wide high volume bar. That day (last Monday) posted the highest daily volume in four years.

Wide high-volume areas are usually tested.

It just so happens, that wide area is below resistance.

To test the wide bar, price action would need to move below the resistance area. Doing so, would put a Wyckoff ‘up-thrust’ into play.

The next chart shows another resistance area not easily discernable:

Although somewhat hidden, there’s another resistance level that for now is putting a limit on the upward travel of IBB.

Summary:

MRNA’s at an extreme. The previous update linked to a site which shows insiders bailing out in the tens-of-millions of dollars.

The bond market, with its upside breakout is not confirming the ‘recovery’ narrative.

The dollar is reversing as well.

Gold and the miners have stalled; potentially reversing.

The narrative is shifting as the media (all controlled don’t forget) has decided on its sacrificial, e-mail lamb.

Don’t worry, nobody’s going to jail. It will just be another distraction to keep the mask wearing masses from getting prepared for the fall.

As a reminder, this is how they think; ‘Just doing the right thing’ Almost like ‘Just following orders’.

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.