Category Archives: Wyckoff

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

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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

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

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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

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

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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

‘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

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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

Positioned For Trouble

August 3, 2024 By in $SPSIBI, Biotech, LABD, LABD-24-16, SOXS, SPBIO, Wyckoff, XBI, ZeroHedge 1 Comment

When The Tide Goes Out

We all know the quote attributed to Buffett:

‘When the tide goes out, that’s when you find out who’s been swimming naked’.

Or, to put it another way:

‘Everybody’s a genius in a bull market’.

Well, ladies and gentlemen, here we are.

We’re about to witness what method’s best suited to handle typical ‘price destruction’ behavior of a bear market (here and here) along with possible chaos in commodities.

That challenge also includes this site of course.

Bear Market Behavior

If we’re really entering a bear market, prices typically do not go straight down unless there’s an outright crash.

No …Bear markets are all about what’s called ‘price destruction’.

That is, price action whipsaws a near infinite number of times; getting into (a short) position for the downside or (long for) an upside squeeze is incredibly difficult.

The most recent example of this was the volatile whipsaws in 3X leveraged inverse fund, SOXS:

Swings over +/- 20%, back-to-back in days if not hours.

With that said, we’re looking at biotech XBI, to see if there’s a chance of it being ‘well-behaved’ during a decline (not advice, not a recommendation).

Biotech XBI, Weekly

On a weekly close basis, we’ve had a double top.

Using the MACD, it shows momentum weakened on the leg up to the second top.

Watching price action (the tape) of XBI late Friday, near the close, it gave the appearance of short covering.

Upward spikes that appeared to be labored.

If that’s true, then a lower open at the next session would be the expectation (not advice, not a recommendation).

Taking Action

As the disclaimer states, this site is ‘not certified’ by the SEC and does not, cannot provide any advice.

What it can do, is infer the actions being taken.

With that said, this update shows the ‘category’ side bar with LABD-24-16, thus inferring a short position via LABD.

That’s the firm’s identifier used for spreadsheet tracking; the 16th biotech short via LABD, for the year.

Never Too Early, To Trend

In the next update, we’ll discuss how even in the early stages of (potential) XBI reversal, we may already have a trendline.

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

Targeting, Taiwan Semi (TSM)

July 23, 2024 By in Semiconductors, SOXS, SOXX, TSM, Wyckoff

Once A Trend Is Broken …

According to Wyckoff principles;

‘Once an up-trend is decisively broken, the market will (typically) attempt some kind of rally to test the break’.

Looking at the daily chart of Taiwan Semi, TSM, there’s no doubt the uptrend has been broken.

Taiwan Semi, TSM, Daily

The amount of (daily) down-force exhibited on the July 17th, trend-break, was the most ever for TSM.

With such a massive down-force, we’re in uncharted territory. The test, if it comes can complete at any level.

Currently as of 1:25 p.m., EST, TSM is trading at 170.6, near the 23.6%, retrace.

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

Hanging By A Thread

July 13, 2024 By in Artificial Intelligence, NVDA, Semiconductors, SOXS, SOXS-24-12, SOXX, Up-Thrust, Wyckoff

SOXX Bulls, Lose Their Grip

For most of Friday’s session, SOXX bulls looked like they would make it.

Price action pushed up to within 1%, of a new all-time-high.

Levels threatening the A.I. reversal scenario right up until 30-minutes before the close.

Then, the air came out.

The SOXX, closed up for the day, but just under the breakout, shown in the chart below.

Semiconductors SOXX, Daily

Along with closing below resistance (blue line), price action did so on contracting volume.

Volume contraction implies, commitment to higher prices is weak (not advice, not a recommendation).

Sentiment, Volume, Price

That’s the reversal construct being used on this site.

First, the sentiment, then volume, then finally, the price.

Looking at the 5-Year Weekly chart of Nvidia, we can see it playing out in real-time.

Nvidia NVDA, Weekly

The professionals have already left the chat; storm clouds are beginning to appear.

So far, ‘Week 89’ reversal remains intact.

The Danger Point®

From an engineering standpoint, the SOXX, has met the requirements for a Wyckoff up-thrust (not advice, not a recommendation).

First: Price action posted an outside-down reversal (last Thursday), on increased volume and closed below established resistance.

Second: That reversal was then tested (on Friday) and did so, on contracting volume.

Third: MACD, divergences on Weekly and Daily timeframes; although near-term weekly has yet to tick lower but still (diverging) below the highs of this past March.

    Intuitively, you can feel that something’s up. The A.I. pump-n-dump set-up may have run its course.

    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

    CORN … At Lows, Stops Dead

    July 6, 2024 By in Corn, David Weis, Derecho, ice-age-farmer, Wyckoff

    Penetrates & Holds Below Support

    Penetrating and holding just below support, we know what that means.

    CORN is at The Danger Point®, in spring position (not advice, not a recommendation).

    The chart below covers over four-years of price action; within that, we have at least three technical items to cover.

    Somebody Always ‘Knows’

    First, how does volume in CORN, go from basically nothing, to increasing over 400%, six weeks before, the perfectly timed and positioned (in the corn belt), ‘Derecho‘.

    That location is identified as ‘What’s This?’

    As Wyckoff said a century ago: ‘Somebody always knows something and that ‘something’ shows up on the tape’.

    CORN Fibonacci, 8-Day

    Second, is the successive decrease in downward thrust over the past three-years; at this point, nobody’s watching.

    All of that brings us to the third technical point.

    CORN has retraced to support (blue line) which just happens to be a Fibonacci 61.8%, level; penetrates that support and so far, has stopped dead.

    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

    Biotech … The ‘Clubhouse Turn’

    July 2, 2024 By in $SPSIBI, Biotech, LABD, LABD-24-13, SPBIO, Wyckoff, XBI

    Testing Complete … ?

    Is biotech (finally) coming around the Clubhouse turn?

    Has it finished its two-months of (upward) testing and ready to reverse lower?

    We’re about twenty-minutes before the open; pre-market action is posting a tight range (magenta arrow), shown on the inverted chart.

    Biotech XBI, Daily (Inverted)

    For the beginnings of a ‘confirmation’, we’ll need to see a new daily high (new low, non-inverted).

    From a Wyckoff standpoint, note the net distance traveled has become shorter and shorter.

    A potential reversal may be at hand (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