Category Archives: Wyckoff

Kabuki ‘Debt Ceiling’, & Gold

May 24, 2023 By in David Weis, DUST, GDX, GDXJ, GLD, JDST, SLV, Wyckoff 2 Comments

How To Trade ‘Kabuki’

You would think with all the handwringing, mental machinations, ‘debt ceiling’, we’re all going bankrupt, YouTube gold grifters et al, gold (GLD) would be in a monstrous rally.

Instead, we have what appears to be exhaustion and non-confirmation.

Gold (GCM23), is the only monetary metal (gold, palladium, platinum, silver) anywhere near its all-time highs.

Old-timers would call it a huge non-confirmation. The other metals are not on board with the ‘inflation’ narrative.

Time and again, we’re back to actually reading price action and having it tell us what’s real, not the mainstream.

So, trading ‘kabuki’ seems to be straightforward; just read the chart. Here’s one explanation from an unlikely source on why that simple task is so difficult: absolute, total, unrelenting focus.

Gold (GLD), Daily

When we look at gold (as of 12:05 p.m. EST), from a technical standpoint, it’s in Wyckoff spring position; a set-up to move higher.

The difference in this set-up as opposed to the one on November 3rd, of 2022 (not shown), price action’s ‘hugging the lows’ as David Weis used to call it.

We’re not springing higher.

The miners on the other hand (GDX, GDXJ) have already made their decision, moving decisively lower during this session (not advice, not a recommendation).

Junior Miners GDXJ, Daily

The chart below has two locations identified.

The first is this post identifying GDXJ, as a potential short opportunity.

The second is this post identifying the ‘test, reverse’ of the up-thrust with high probability of more downside (not advice, not a recommendation).

We can see the result.

Even though gold (GLD) had declined modestly with silver (SLV) more-so, the mining sector appears to be responding dramatically to the downside.

This ‘elevated metals, miners collapsing’ potential has been discussed previously.

Now, it appears that strategy is coming into play (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

Gold At The ‘Wedge’

May 20, 2023 By in DUST, GDX, GDXJ, Genesis 41, GLD, JDST, Livermore, Michael Cowan, Neil McCoy-Ward, The Speck, Wyckoff 1 Comment

What Comes Next ?

Gold bulls could get cooked.

If gold does not go higher, it’s because of ‘manipulation’, right?

The typical YouTube gold grifter acts like manipulation is a new discovery.

It’s the ‘go-to’ excuse when their forecasts don’t work out.

Way back in the early 1900s, Wyckoff discovered the market has always been manipulated.

His insight was, it’s up to the speculator to figure out the objective of the manipulation and then act accordingly (not advice, not a recommendation).

Livermore knew about manipulation and even engaged in it himself. He looked at things in a slightly different way; meaning, what is, not, what should.

A very key difference.

So, let’s look at what is happening with gold (GLD), and where it may head from here.

Gold GLD, Weekly

First, the chart from the April 9th, update.

Now, the updated chart.

It took gold (GLD) several weeks to labor higher on ever shortened thrusts before finally exhausting itself and rolling over into a reversal … where we are now.

Is price action hesitating before heading higher or is this a significant downside move in the making?

It probably won’t be long before we have the answer.

Junior Mining Sector GDXJ, Weekly

The gold mining indices GDX, and GDXJ, have already made their decision, reversing to the downside.

Note: Each reversal from a gold peak in the Junior Sector GDXJ below, is at significantly lower levels. This is not gold miner ‘bull market‘ behavior (not advice, not a recommendation).

It’s clear, the Junior Miners are in a bear market …

The GDXJ, is completing or has completed what is an obvious bear flag or terminating wedge.

Unless price action shows us differently, this is the current assessment; lower prices ahead (not advice, not a recommendation).

Fundamentals

From a fundamental standpoint, where’s the demand for inedible (possibly fake) metal going to come from? The consumer’s already tapped-out and borrowing money just to buy the weekly groceries.

Maybe something else is going on.

Something else that’s causing precious metals miners to anticipate another huge (economic) move lower.

Possibly completely unrelated (in a way) to the mining sector … maybe yet another ‘Speck’ event, shown at time stamp 3:40, at this link.

At the same link, time stamp 5:25, we’re back to the food supply … yet again.

“And all countries came into Egypt to Joseph for to buy corn; because that the famine was so sore in all lands.”

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

Gold Miners … Test & Reverse

May 15, 2023 By in GDXJ, GLD, JDST, SLV, Wyckoff 4 Comments

Decisive Rejection

Is the bottom about to fall out?

The last update on the Junior Gold Miners GDXJ, said they were hanging by a thread.

That update even included a forecast which turned out to be wrong and right at the same time (not advice, not a recommendation).

The miners have reversed … it just did not happen the next day as shown on the forecast chart.

The decisive rejection of the resistance (and test) level happened four days later.

Today, continued a slight retrace of that down-move as shown on the daily close chart below.

Junior Miners GDXJ, Daily Close

The attempt to push above known resistance (blue line) has failed. Price action had a false breakout (Wyckoff Up-Thrust), then a test and subsequent failure of that test.

The zoom of the reversal area shows more detail.

Last Friday’s session closed higher as did today … however today’s volume (i.e., commitment) was down – 49.4% when compared to the prior session.

The buyers are pulling back … price action is drifting higher.

On a weekly basis, we still have a bearish MACD divergence (not shown). Probabilities at this point indicate lower prices ahead (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

Nat-Gas … The ‘Disruption’ Trade

May 8, 2023 By in GDXJ, JDST, Natural Gas, UNG, Van Metre, Wyckoff 5 Comments

Waiting For The Next Shoe

Nat-Gas, at multi-year lows but for how long?

We’re not in Kansas anymore and to expect things to operate ‘normally’, is a strategic error (not advice, not a recommendation).

The last update on Nat-Gas, specifically the futures, warned of new lows before a significant reversal:

“The Nat-Gas futures contract for May (NGK23), needs to post above 2.383 soon (in the next day or so), or the contract is at risk of pressing to new lows.”

Well, we’ve moved on from the May contract to the June contract and that contract indeed posted a new low this past Friday, the 5th.

Just Because …

Just because nat-gas is down, does not mean that it has to go up. That type of thinking is another error, typically called a ‘mind trap‘.

A better way to think about the situation, is to figure on a ‘disruption’ of some type, resulting in either a destruction of supply or excess demand over the usual conditions for the season (weather) at hand.

So, let’s see if the charts agree with that premise from a Wyckoff analysis standpoint.

Nat-Gas UNG, Weekly

Each significant downward thrust is becoming shorter in net distance traveled.

The horizontal blue lines tell the story. We’re nearing the end of the down move (not advice, not a recommendation).

Now, on to the daily. Price action penetrated support and has reversed … it’s in Wyckoff ‘spring’ position.

Natural Gas, UNG Daily

Of course, what happens next is the question.

Just as this post said we’d revisit it towards the summertime, showing there’s no Fed ‘pivot’, we can also propose there’s likely to be a severe disruption in the supply of nat-gas (not advice, not a recommendation).

Housekeeping & The Junior Miners, GDXJ

The expected lower open in the GDXJ did not happen.

So far, it’s been a narrow range day (as of 10:47 a.m., EST).

Price action is oscillating around unchanged and there appears to be no urgency to move either direction.

Standing on the sidelines for now (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

Hanging By A Thread … GDXJ

May 7, 2023 By in GDX, GDXJ, GLD, Gold & Silver, Gold Miners, JDST, Wyckoff 5 Comments

At The Next Open

If we’re at the downside pivot for gold and the miners, there’s only one right answer for the next market session.

That answer is:

Lower open, lower high, lower close.

Not advice, not a recommendation.

However, it is an assessment of where we are in the market cycle for gold and the miners.

The focus is on the Juniors GDXJ, as they are the weakest of both gold GLD, and the Seniors GDX.

If GDXJ, does not open lower, there’s something else happening; that would mean the downside reversal potential is in question and/or it could morph into more testing at the Axis Line, previously discussed.

Here’s a close-up of the sector.

Junior Miners GDXJ, Daily

Volume bar No. 1, corresponded with a solid up move for that session; shown as Price Bar No. 1.

Volume Bar No. 2, is where it gets interesting.

Specifically, higher volume, more narrow range (net distance) and a close well off the high.

Wyckoff called this: ‘effort vs. reward’.

Lots of effort (volume) with less reward (distance) than the previous move.

The next session confirmed that assessment by opening gap-down and then spending the entire day attempting to close higher … which did not happen.

That day (last Friday) may have been short covering. If so, we’re about to find out.

Junior Miners, GDXJ, Daily (forecast)

If we’re in a reversal (a big if), then we’ll get some variation of the price bar (black arrow) as shown (not advice, not a recommendation).

For the bearish option to remain intact, GDXJ needs to open lower and close lower for the day.

However, it does not need to post a new daily low, although that would help the case for more downside.

Anything other than what’s just described, would indicate a more complex price action environment.

If that happens, an update will be released.

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

Gold Bulls … Exhausted

May 6, 2023 By in GDXJ, GLD, Gold & Silver, Gold Miners, Wyckoff 5 Comments

The Volume Speaks

Nearly everyone expects gold to go higher; much higher.

You want ‘clicks’ on your website? Then talk about how gold’s going to the moon.

It’s an easy grift. Everybody’s doing it.

However, gold’s truth is in the price action, not the grift.

We’re going to look at that truth and more specifically, what gold’s (GLD) volume is telling us.

With full understanding that anything can happen, gold could go higher, there’s a case for a significant downside reversal (not advice, not a recommendation).

Gold GLD, Weekly

In Wyckoff analysis terms, volume is the energy behind the move. It’s the commitment … or lack thereof.

Last week’s volume is far below the prior spike high set during the ‘invasion’.

It’s down over 56% from the ‘invasion’ spike and down 26% from the most recent spike.

Demand, commitment and thrust energy, are backing away from the gold market.

Moving down to the daily, we see the net distance traveled with each significant thrust is shorter than the last.

Gold GLD, Daily Close

Wyckoff wrote about this observation a century ago when discussing how to spot the end (or absorption phase) of a move.

He called it ‘shortening of the thrust’.

So, there it is. The weekly chart shows each major volume spike is less than the last.

The daily close has net distance traveled less than the last.

Add in the mining sector’s GDXJ, posting its most recent peak four weeks ago (week ended April 10th).

Last week’s action in the Junior’s appeared to be an act of desperation by the bulls.

We’ll cover that sector in the next update.

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

Gold Miners … The Reversal

April 29, 2023 By in Derecho, GDX, GDXJ, GLD, Gold & Silver, Gold Miners, JDST, Jerimiah Babe, Spring-to-Up-Thrust, Wyckoff 1 Comment

Each Peak Is Lower

Gold’s reversal or potential for reversal, has already been covered here, here and here.

We’re going to focus on the Junior Miners GDXJ but start first, with an updated chart of gold (GLD).

Gold GLD, Weekly Close

This is how it looked back on April 15th.

As of the close yesterday, we have this:

It’s arguable GLD, is now below the resistance line (completing the Spring-to-Up-Thrust) but that’s not the most important part from a trading standpoint.

When looking at the Junior Mining Index GDXJ, there’s an ominous pattern.

Junior Miners GDXJ, Weekly Close

Each extreme peak over the last three-years has been labeled; the Derecho of 2020, the so-called Ukraine ‘invasion’, and now, the banking crisis.

Note: The SVB bank failure was on March 10th. There was a ‘knee-jerk’ reaction by the public into gold and related components … that peak appears to have stalled at the location shown.

What’s going on is obvious; it’s a bear market.

Each major peak, lower than the last.

Now, the interesting part.

The Junior Miners are in Wycoff Up-Thrust condition.

In this case, price action’s solidly below the resistance line.

Looking at the daily (not shown), there may have been a ‘test’ of resistance this past week for a move higher; if so, it failed and GDXJ closed slightly lower.

Summary & Positioning

So, here we are: The market (SPY) has rallied over the past week, giving the illusion that all is well.

However, it too is now in up-thrust (reversal) position.

For my business accounts, it looks like being short the miners at this juncture is lower risk than being short biotech (not advice, not a recommendation).

Typical short vehicles that could be used (not a recommendation) are DUST and JDST.

As always, anything can happen. If the markets ‘implode’, they might be closed for any number of days or weeks.

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

Short Squeeze … Biotech

April 28, 2023 By in $SPSIBI, Biotech, LABD, Wyckoff 1 Comment

Running The Stops

It looks like we’re in a squeeze with price action screaming higher.

As shown in the last update, the LABD hard stop was @ 16.79 (not advice, not a recommendation).

With that said, the entire short position was exited at 16.7501, early in the session.

Overall gain was around 3.96%

With the housekeeping out of the way, let’s move on to the chart and see where price action’s likely to head next.

Biotech SPBIO, Daily

We’ll get right to the point and show the most likely area to clear out stops and potentially set up for the next reversal.

The moving averages have been left in the chart (not a usual practice) because that’s the focus of the crowd.

In their minds, a close above the 200-Day MA, would be bullish.

If that happens, from a Wyckoff standpoint, we could be in up-thrust (reversal) position.

Fibonacci Time

Also of note: When a Fibonacci sequence becomes obvious, that’s when it tends to fall apart or morph into some other type of sequence.

That may be happening now.

Strategy

As always, price action can and will do whatever is necessary to extract as much from both sides (bull, bear) as possible.

It may contact the 200-MA or not. It all depends on where the most stop oerders are hiding.

Slightly above the recent highs looks like a good area for those stops.

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

Mastering The Reversal … Biotech

April 22, 2023 By in $SPSIBI, Biotech, LABD, SPBIO, Wyckoff 1 Comment

At The Extreme

We’re about to find out if Biotech’s in a new bull market or at the retrace extreme, ready for reversal.

The last update gave us the big picture on the index; a massive H&S pattern, five years in the making.

A potential trendline was shown on the daily chart of inverse fund LABD. That trend was subsequently negated by price action just hours later.

Let’s look at SPBIO, more specifically, the 4-Hour Chart.

To mimic price action of leveraged inverse LABD, we’ll invert the SPBIO.

The reason for inverting, not using LABD, is that leveraged funds have a downward bias which distorts the actual data.

Biotech SPBIO, 4-Hour, Inverted

The chart highlights Point No. 1 and Point No. 2. These areas are identified as a reminder; the prior set-up and reversal was identified, to-the-day.

There’s no guarantee the same performance will be repeated, i.e., spotting the next reversal.

The chart below, shows why we’re at The Danger Point®

Wyckoff discussed a phenomenon he called ‘shortening of the thrust’. When price action’s ready to reverse, the directional thrusts become shorter.

We’ll zoom-in on the recent action to show that Friday’s session failed to post a new daily low (high for non-inverted).

Now new low, may be the reversal nuance or not … we’ll find out at the next open (not advice, not a recommendation).

Not shown on the chart, price action’s retraced a Fibonacci 50%, of the entire move from the set-up and reversal of February 2nd, and 3rd.

Summary

Taking it all in aggregate, we’re obviously at an extreme and either going to reverse from here or launch into a sustained continuing directional move.

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

Nat-Gas … New Lows ?

April 20, 2023 By in BOIL, LABD, SPBIO, UNG, Wyckoff 1 Comment

The Tape Is Always Right

The Nat-Gas futures contract for May (NGK23), needs to post above 2.383 soon (in the next day or so), or the contract is at risk of pressing to new lows.

We’ll look at the ETF proxy for nat-gas UNG, below, showing a Wyckoff up-thrust (downside reversal) condition.

As this post is being created (8:51 a.m., EST), the pre-market session shows the futures and UNG, oscillating about unchanged.

Natural Gas UNG, Daily

As with the upside reversal identified in the biotech sector (link here), we’re just reading the tape and acting accordingly (not advice, not a recommendation).

With that said, a trade was executed and closed in leveraged fund BOIL, with the following details:

BOIL Entry: 3.15

BOIL Exit: 3.45

Profit (Loss): 9.52%

The expectation was for a much larger profit.

However, price action is not behaving as if it’s in a strong up-trend. It’s even at risk of posting new lows as a result of the Up-Thrust condition noted above.

Meanwhile, biotech looks like it’s about ready to reverse.

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