Category Archives: Wyckoff

Massive Top (Reversal) … Merck

September 4, 2024 By in Biotech, David Weis, Dr. Elder, Drug Manufacturers, MRK, Semiconductors, Wyckoff

Right Along, With Semis’

Those ready (positioning) for this potential historic reversal in the major indices, are at long last getting the sense, ‘The jig is up’.

As Dr. Elder has said, ‘the markets will hypnotize you’. They will lull you to sleep and then reverse with a vengeance.

So, it may be with our example of the day, Merck (MRK).

No-Brainer … To Brain-Dead

Back in the day when posting on SeekingAlpha, Merck was a no-brainer amongst the grifter crowd.

Since fundamentals don’t move markets, and Merck continued to grind higher week after week, month after month, one could publish any amount of ‘research’ and look like a genius.

Oh, how times have changed.

As we’ll see below, Merck has been in a massive topping pattern, or Wyckoff Up-Thrust.

Merck, MRK, Weekly

There’s a lot going on with this chart.

It’s been about seven-months of grinding at the highs, only to break down on heavy volume the week of August 6th.

Then, it was five weeks of ratcheting higher in a test, reversing this week.

Note the testing action was in response to the wide high-volume bar.

As David Weis said in his video, wide high-volume bars tend to be tested; here we see evidence of that action.

As always, anything can happen and Merck could levitate higher. However, we can see just from the chart alone, that prospect looks like a low probability (not advice, not a recommendation)

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.

The Danger Point®, trade mark: No. 6,505,279

Bond Market … Bombs

August 31, 2024 By in Bonds, Federal Reserve, Interest Rates, TLT, Wyckoff 1 Comment

Look Out Below

The last update on bonds, left us with this:

“At this juncture, it’s not unreasonable to say bonds (TLT) are at The Danger Point®”

It’s now five trading days later and five successive lower closes on TLT.

Wyckoff analysis provided the edge to surmise, the next probable direction for bonds was down.

Now that rates are back on the upswing, the interesting part (get your popcorn ready) is how, or what, the Fed is going to do at the next meeting … Tick, Tock. 🙂

Long Bond Proxy TLT, Daily

If bonds continue lower, it’s going to get more than a little interesting.

At the minimum, one would have advance warning, rates may not be lowered and/or, if they are, that move could be quickly reversed (not advice, not a recommendation).

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.

The Danger Point®, trade mark: No. 6,505,279

Persistence

August 29, 2024 By in Artificial Intelligence, Dr. Elder, NVDA, Semiconductors, SOXS, SOXS-24-14, SOXX, Wyckoff

Like a Terrier On A Mailman’s Leg

As of 3:10 p.m., EST:

The Cliff Notes version of what’s happening with the SOXX, is this:

NVDA, has not posted a new daily high.

However, the SOXX, pushed to a marginal new daily high, stopped out the short position and now appears to be in collapse (not advice, not a recommendation).

The new daily high for the SOXX, counts as a Wyckoff Up-Thrust and reversal to the downside.

That’s where we are now.

Positioning:

The amateur never gets back in once stopped out (per Dr. Elder). I have long since passed that mental block; repositioned short again (not advice, not a recommendation).

Trade is labeled as SOXS-23-14 … charts 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.

The Danger Point®, trade mark: No. 6,505,279

The ‘Secret’ Lies With Bonds

August 25, 2024 By in Bonds, Federal Reserve, Interest Rates, Prechter, TLT, Wyckoff, ZeroHedge 1 Comment

What Happens, When It Doesn’t Happen?

‘The truth has no defense against the man determined to believe a lie.’

Unknown

It’s been proven many times on this site and by others more notable (i.e. Prechter), the Fed is not a leader.

They are followers; essentially reacting (not responding) to what the bond market is telling them.

Done Deal? … Not Yet

The financial press acts like a rate cut is a done deal.

However, when looking at the chart (i.e., the real leader), long bond proxy TLT, it makes perfect sense the Fed would propose a cut at the September 17 – 18, meeting.

It’s what happens between now and then, that’s important.

For clues as to what that ‘then’ could be, we go to the bond market itself.

Long Bond Proxy, TLT, Daily

“What do you see?”

There’s a lot going on in this chart; the mark-up (below) is divided into two.

First, is the targeted measured move (that’s been met) out of the wedge formation (not advice, not a recommendation).

Next, we’re also in a Wyckoff Up-Thrust condition which may have been tested on declining volume, this past week (not advice, not a recommendation).

At this juncture, it’s not unreasonable to say bonds (TLT) are at The Danger Point®

It would appear, the weight of a feather could move prices either way.

The interesting part will be what comes next; Sunday overnight Futures open, is about nine-hours away …

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.

The Danger Point®, trade mark: No. 6,505,279

Russell 2000, Search for ‘Danger’

August 19, 2024 By in David Weis, DRV, DRV-24-03, IWM, IYR, Real Estate, Russell 2000, TZA, TZA-24-01, Wyckoff

Testing at The Axis

At this juncture, Russell 2000, IWM is not only looking for The Danger Point®, but at the close of this session, it’s there.

While everyone else is breathlessly calling the ‘end of the correction’, we’re working the market from a strictly objective standpoint.

That is, what’s the market saying about itself?

With that, take a look.

Russell 2000, ETF IWM

“What do you see?”

Well, it appears that we’re at the point where it can go either way.

It’s as if the ‘weight of a feather’ could move the market (Wyckoff, 1910).

Positioning

From a positioning standpoint, this is where the risk is least for a short position (not advice, not a recommendation).

Low risk does not mean no risk. It just means a potential inflection point.

Housekeeping

As stated in this update, the short trade via DRV, had a tight stop. That position was exited early in the session with a ding (loss) of about 4%.

Moving on to the market at hand.

David Weis mentored his students to look for trades at the ‘edge of the lake’.

We’re there with the price action of IWM. Several attempts (up to a point) to position short are to be expected (not advice, not a recommendation).

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.

The Danger Point®, trade mark: No. 6,505,279

Bonds In Trouble … Rates Higher?

August 17, 2024 By in Bonds, David Weis, Federal Reserve, Interest Rates, TLT, Uneducated Economist, Wyckoff

The Water’s Fine, Come On In

The financial press and their lackeys, expects the Fed to pull a rabbit out of a hat and lower rates.

The public’s perception seems to be:

‘Happy days are here again’, if rates get lowered, I’ll spend and spend. I can’t help myself, there is no end. So, get rates lowered, again.

Wyckoff warned about the financial press over a century ago. Since then, not much has changed.

In fact, it’s probably worse.

The public thinks rates are coming down. It’s the ‘credible threat’ as Uneducated Economist puts it. The Fed ‘threatens’ to lower rates, and it ‘happens’, sort of.

Actually, rates aren’t lower, but the market has distorted itself, as if they were.

So, let’s get past the narratives and go straight to the truth, price action in the bond market.

Long Bonds, TLT, Weekly Close

As my mentor Daivd Weis used to say: “What do you see?”

I’ve already marked-up the chart and I see one Wyckoff Up-Thrust, reversal, after another (not advice, not a recommendation).

That, along with exhaustion spikes in Force Index, at or near significant reversals.

The ‘Scary’ Part

Wyckoff analysis is not only price action, it’s volume as well.

Look at the volume in TLT, over the past year.

Massive inflow and what has price done? It’s gone essentially nowhere.

Wyckoff called this ‘Effort vs. Reward’. Lots of effort with little (net) reward.

Add to that, a potential exhaustion spike in Force Index (far right side, purple circle).

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.

The Danger Point®, trade mark: No. 6,505,279

Update: Ins & Outs

August 16, 2024 By in $SPSIBI, Biotech, DRV, DRV-24-03, IYR, LABD, LABD-24-17, Real Estate, SPBIO, Wyckoff 1 Comment

Biotech and Real Estate

Those monitoring this site are witnessing the search (for the short entry) in real time.

As said in the prior update, just because Fibonacci lines up, both in time and distance, does not guarantee anything.

From a Wyckoff perspective, as a result of Wednesday’s XBI price action penetrating the prior days’ low, and then stopping dead, there was a probability of a (minor) spring … which we got the very next day.

By the way, that upward move (yesterday) carried the XBI, near another Fibonacci retrace level: 61.8%.

As a result, the LABD-24-17, was exited with about a 3.6% loss (not advice, not a recommendation).

Now, on to the action at hand.

Real Estate IYR, Daily

Depending how price action progresses, we’ll go into more detail on the technical condition.

Today printed a new daily low and we have an MACD (bearish) crossover still in effect.

Trade action was to go short via DRV with a representative stop (for DRV) one tick above the IYR high: 95.96 (not advice, not a recommendation).

Admittedly, it’s a tight stop and that’s the point.

If IYR turns and starts to exhibit buoyancy, we don’t want to hang around.

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.

The Danger Point®, trade mark: No. 6,505,279

Bonds, Oil & The Squeeze

August 13, 2024 By in Bonds, DRIP, DRIP-24-01, Oil, Oil & Gas, TLT, USO, Wyckoff, XOP, ZeroHedge

Bond Market Model?

According to this just out from our financial press, hedge fund managers have reduced holdings of Brent crude futures to ‘lowest levels on record’.

That condition supposes some kind of bullish bias and potential upside reversal.

Never mind the chart only goes back to 2011.

So, it’s really ‘the lowest in thirteen years’.

That’s hardly the hundred years or so, one would infer without digging deeper.

The Bond Model

Let’s not forget, bonds had a similar ‘maximum short‘ condition back in 2020.

Back then (like now), the ‘max-short’ was supposed to result in some kind of history making squeeze.

The result? It never happened.

Instead, bonds collapsed, rates launched higher and here we are today.

With that, let’s look at oil proxy, USO.

U.S. Oil Fund, USO, Daily

As of today’s action, it’s not looking too good for the bulls (not advice, not a recommendation).

It’s somewhat self-explanatory.

Price action is in Wyckoff ‘up-thrust’ position and with today’s reversal, appears to be confirming (not advice, not a recommendation).

As the earlier post stated, I’m already short the sector, DRIP-24-01, with a definitive stop defined as yesterday’s XOP high (not advice, not a recommendation).

If the ‘max short’ for oil really is the pre-cursor to an upward squeeze, we may be about to find out very soon.

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.

The Danger Point®, trade mark: No. 6,505,279

‘Right’ & ‘Wrong’ Answers

August 13, 2024 By in DRIP, DRIP-24-01, DRV, DRV-24-02, IYR, Oil & Gas, Real Estate, Wyckoff, XOP 2 Comments

Lead By Example

Every day, the tape prints one more clue to the next probable direction.

The next probable direction.

Part of an experienced speculator’s pre-market prep is to know from the prior session, the ‘correct’ answer for the current session.

That is, if a set-up has materialized, then subsequent price action will have a specific or variation of a specific pattern.

If the pattern posts on the tape, we have the ‘right’ answer. If not, probabilities are saying ‘no’ at this point.

Of course, the hard part and according to Wyckoff, it laterally takes many years of observing and working with price action to know what to expect.

Real Estate, ‘Wrong’

This morning’s session in real estate, IYR did not post the ‘right’ answer from a short standpoint. A lower open and lower print was the expectation.

Therefore, DRV-24-02, was exited with just over a 2%, loss (not advice, not a recommendation).

However, oil and gas XOP, gave the ‘right’ answer.

Oil & Gas XOP, Daily

The circled price action is what we’re looking for (not advice, not a recommendation).

There’s a lot going on with this chart.

If XOP continues lower and short, DRIP-24-01, is not stopped out or exited, we’ll re-visit this action with further updates (not advice, not a recommendation).

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 herexop

Stop … Drop … Trend

August 4, 2024 By in $SPSIBI, Biotech, David Weis, LABD, LABD-24-16, SPBIO, Wyckoff, XBI 3 Comments

Early Signals

It’s never too soon to look for a trend.

The daily chart of biotech XBI, may be showing us early signals of a trend as well as trading channel.

Back in the day, when being mentored by David Weis, he would typically start the session by putting up a chart on his computer (with me logged in remotely) and then ask:

“What do you see?”

More importantly, he did not ask, what I ‘thought’ or what the Fed was doing, or any other mainstream form of distraction. No, it was always “What do you see?”

So, we’ll do the same.

Biotech XBI, Daily

We’re moving in close with the (un-marked) 3-month, daily; what do you see?

Two things should be noticed almost instantly.

Frist: Heavy volume at the last session this past Friday.

Second: Price action (the close) is hanging in ‘mid-air’ with the next support level over two-points away, near 94.0.

Now, for the marked-up charts.

We’re using the ‘reverse’ trendline technique, presented in the Weis video to determine a potential right side trendline (black dashed line).

Next, we have the Up-Thrust on the daily which is also the right side of the ‘double top,’ shown on the weekly.

Taking both timeframes together, implies a significant inflection point (not advice, not a recommendation).

Anything can happen and the market could recover at the next session.

We’re below support (now resistance) and therefore, technically, in Wyckoff ‘spring’ position.

However, probabilities indicate we’ve had a downside pivot of some significance. That, along with heavy volume at Friday’s session would imply follow through at the next session (not advice, not a recommendation).

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.

The Danger Point®, trade mark: No. 6,505,279