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