Category Archives: Wyckoff

Biggest Bull Trap, in History ?

February 3, 2023 By in $SPSIBI, Biotech, IYR, LABD, Real Estate, SPBIO, Wyckoff, ZeroHedge 8 Comments

Slow Descent, At First … Then, Mass Sell-Off ?

The large number of VIX (volatility) Calls, tells us, not to expect an immediate sharp move lower.

Those Calls will likely need to be bled-off in value, before we get a significant downward spike … if there is one.

Market Summary, Watch List

Over the past week, there are two markets that are being monitored for short position entry: Real Estate and Biotech; IYR, and SPBIO, respectively.

After nearly five months of price action whipsaw and congestion, biotech appears to be in a nascent downside reversal. Real estate looks to have reversed today (not advice, not a recommendation).

Biotech has been the weakest (technically) of all the major indices (except miners, GDX and GDXJ).

We’re going to look at the daily chart of SPBIO, to see the opportunity and the risk.

Biotech SPBIO, Daily Close

Since late September last year, there has been sideways-to-up, price action congestion.

Price action today, appears to have resolved into a nascent reversal.

We’re going to invert the chart to mimic the leveraged inverse fund LABD, showing the opportunity and the risk.

SPBIO, Daily Close (Inverted)

The prior two days of Fed induced bullish short-covering hysteria, have resulted in a decisive penetration of the support level, as shown.

By definition, this puts us in Wyckoff ‘Spring Position’; be on guard for a potential reversal.

Positioning

There have been many false starts to this sector’s reversal as evidenced by previous posts.

However, today’s action is consistent with resolution of the five-months of congestion (not advice, not a recommendation).

Every trading/speculator has their own style and this site does not give financial advice.

With that said, a (highly leveraged) short entry via LABD, would have a hard stop at today’s low.

At present (2:15 p.m., EST) and entry at LABD 12.91 would have a stop at 12.45, yielding a ‘risk’ of 0.46-pts.

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

Et Tu, Biotech ?

February 2, 2023 By in $SPSIBI, Biotech, LABD, Wyckoff 3 Comments

Biotech SPBIO Joins The Ranks In ‘Danger’

The clock is ticking for biotech in so many ways. Now, one more event.

Shown below is an inverted chart of biotech sector SPBIO.

While all the major indices have posted a bear market rally above their 200-Week moving average (except the miners), the SPBIO, has remained firmly below those levels.

Now, today, we have a decisive penetration of resistance as shown on the daily below.

The chart has been inverted to mimic the 3X Leveraged Inverse Fund LABD.

So, ‘resistance’ now becomes ‘support’ on the inverted chart.

Biotech SPBIO, Daily (Inverted)

We’ve penetrated ‘support’. Therefore, we’re in Wyckoff ‘Spring Position’, ready for reversal.

Even as this post is being created (2:25 p.m., EST), LABD is coming off its lows; currently trading at LABD: 12.61

A push back above support (approx. LABD 14.00 area), would indicate the spring reversal, is underway (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

Real Estate’s Potemkin Village

January 28, 2023 By in Federal Reserve, IYR, Prechter, Usual Suspects, Wyckoff, ZeroHedge 1 Comment

The ‘Pain Trade’ = Opportunity

‘Some of the best market traders are former Marines.’, Prechter

That’s a paraphrased quote from Robert Prechter Jr., given during an interview in the early 1990s.

The inference: Marines succeed at trading because they have been conditioned to endure and perform while being in pain … physical and mental.

On the other hand, the financial press, being ever so helpful during this unprecedented collapse, is all too happy to help analyze the situation by catastrophizing on how ‘painful’ the market feels.

We’re going to be ‘bathing in lava‘, according to them.

If we go to Jerimiah Babe at time stamp 1:36, the mainstream press is still touting ‘The consumer is strong’.

In other videos, Babe, has shown how devastated the real estate market really is … ‘boots on the ground’ reports at vacant malls, empty parking lots and new (unoccupied) housing developments that stretch for miles.

With that backdrop, let’s look at what the price action of real estate is telling us … is the consumer strong?

Real Estate IYR, Weekly

There are so many things happening in IYR, it will probably take several updates.

At this point, price action exhibits the following:

Currently in Wyckoff ‘Up-Thrust’ condition, potential reversal

On a close basis, IYR has retraced 38.2% of its entire move.

Repeating trend line(s) underside test.

Trading channel that’s a Fibonacci 34 (-1) weeks wide.

For the week just ended, Force Index is divergent (54.7%, weaker) than the last push higher.

We’ll look at the first three of those, below.

As the market came to a close on Friday, price action pushed through established resistance (and axis line) to end the week higher.

Price action’s in Up-Thrust condition, The Danger Point®

Next, we have on a close basis, a Fibonacci 38.2% retrace as well as testing the underside of a resistance/trend-line.

In the next update, we’ll discuss the possible trading channel and the pressures (Force Index) behind the last move higher.

There Will Be Great ‘Wringing Of Hands’

As always, anything can happen in the markets. The above is not advice or a recommendation.

Next week, we can expect the Usual Suspects to come out and provide their ‘expert analysis’ on what the Fed is likely to do or not.

The Fed on the other hand, has repeatedly said what’s it’s going to do; that is, raise rates.

Interest rate sensitive real estate already appears ready for reversal.

Let’s see what happens. next.

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

Oil & Gas … Reversal ?

January 24, 2023 By in DRIP, NEM, Oil, Oil & Gas, Wyckoff, XOP 1 Comment

Yesterday, Was ‘Day 13’

Monday was Fibonacci ‘Day 13’ from the January 4th, XOP, lows.

With about fifteen-minutes before the open, pre-market action in the XOP leveraged inverse fund DRIP, is trading slightly higher at 12.67.

So, was yesterday the day? Has XOP topped-out and now in the process of reversal?

As always with the markets, the price action itself, will show us the truth.

However, what can be stated with some confidence, is that we’re at a low-risk point for going short (not advice, not a recommendation).

‘Low-risk’, does NOT mean ‘no-risk’

XOP, New Low or New High

It’s somewhat straightforward at this point.

If XOP, posts a new daily low, it increases the probability of reversal. If it posts a new daily high, then price action is possibly on to new all-time highs.

Oil & Gas XOP, Daily Close

The daily chart shows the labored six weeks of rounded top that’s identified as ‘Up-Thrust’.

At present, XOP is testing the underside of that Up-Thrust.

The zoom version of the chart shows the amount of upside effort expended during the rounded top.

Price action spent over a month attempting to move higher, only to collapse into a downside reversal.

Now, we can see that wide price action area is being tested; not unlike the Newmont test as described here.

It’s what the market does.

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 … On The Edge

January 22, 2023 By in Corn, Derecho, Genesis 41, ice-age-farmer, Teucrium, Wyckoff

Waiting, For The Next Chess Move

In chess, most (if not all) opens and responses have a name:

‘Danish Gambit’

‘Cochrane Gambit’

‘Petrov Defense’

‘Scotch Game’

‘King’s Gambit’

It’s been nearly one year, since discussing a potential corn trading strategy; during that time, the strategy remains in effect (not advice, not a recommendation).

We’re still waiting for a chess move from the ‘other side’.

Keeping in concert with traditional opening moves as named above, we’re going to name our set-up as follows:

‘Potato Head Gambit’

That is, an ‘administrative’ move which temporally puts the corn futures market into chaos. A move similar to Carter’s grain embargo of the 1980s.

The weekly chart of tracking fund CORN, shows us something’s about to happen.

Either we get a breakout … or breakdown.

Teucrium Corn Fund, CORN, Weekly

The ‘Derecho‘ is marked as it was the kickoff to the current structure.

A wedge has formed.

A breakdown puts CORN, at a measured move in the vicinity of 18.0; a breakout to the upside, measures approximately to 38.0.

From a trading perspective, a breakdown is preferred.

Price action pushing lower to the 18-area, puts CORN below well established (support) lows of 2021.

A penetration of those lows would (potentially) put CORN in Wyckoff Spring Position.

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 … Breakout or Breakdown

January 13, 2023 By in $SPSIBI, Biotech, LABD, SPBIO, Speck-Effect, The Speck, Usual Suspects, Wyckoff, ZeroHedge 1 Comment

The Usual Suspects

During the past three months, biotech index SPBIO, has been oscillating, coiling like a spring; preparing for a dramatic move.

Then yesterday (Thursday), there’s an upside launch.

We now have price action instability; either the bulls or the bears are in control.

At this point, we don’t know who has the upper hand.

However, based on the list of recent news items below, it does not look good for the bulls.

Biotech’s Frankenstein

Within the past few days, we have this:

Deadline Passes For Pfizer To Submit Results Of Post-Vaccination Heart Inflammation Study To US Regulators

FDA Deviated From Normal Process In Pfizer Vaccine Approval, Documents Show

Former Employees Sue ESPN After Being Fired For COVID Vaccine Refusal

Lead Author Of Research On Pfizer And Moderna Trials Warns COVID Vaccinations Must Be Stopped

Pentagon Drops COVID-19 Vaccine Mandate For Troops

Let’s see if the market’s ready to hand it to this sector. What’s the price action telling us.

Biotech SPBIO, Weekly

The weekly chart shows the potetial breakout.

However, since we’re looking at this from a ‘going short’ perspective (not advice, not a recommendation), the chart following this one is inverted.

When we invert the chart, it takes on a whole different look.

Biotech SPBIO, Weekly (Inverted)

If price action’s spent over three months getting where support has been penetrated only to have it fail into a reversal, the ensuing move has massive potential.

In Wyckoff terms, it’s cause and effect.

The ’cause’ has been three months of congestion. The ‘effect’ is a potential long duration, or wide volatility move.

Before The Open

It’s twenty minutes before the open and 3X leveraged inverse fund LABD, is trading higher by about +3.5%.

This is normal behavior whether we have a reversal or not.

One last check of ZeroHedge, before releasing this post turns up this:

Senator Questions CDC On Why It Claimed No ‘Unexpected Safety Signals’ For COVID Vaccines

The ‘monster’ continues to grow.

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

Oil & Gas … Breakout on Friday?

January 11, 2023 By in DRIP, Oil, Oil & Gas, Spring-to-Up-Thrust, Wyckoff, XOP 2 Comments

Repeating Pattern … ‘Spring-to-Up-Thrust’

When Oil & Gas Sector XOP, pushed above last week’s high, it negated the breakdown scenario.

At the same time, it opened another potential opportunity that may set-up this coming Friday … The 13th.

We’ve shown over and again, markets tend to exhibit repeating patterns. Things like trading ranges, terminating wedges, breakouts and breakdowns, are not new.

However, there’s a lesser-known characteristic; the tendency for a market to go straight from a Wyckoff ‘spring’, into an ‘up-thrust’.

That phenomenon is described at this link.

Currently, we’re about mid-way into the set-up as shown on the daily chart of XOP.

Oil & Gas XOP, Daily

Price action pushed below support (the spring set-up) and is now mid-way into that spring; potentially going straight into an up-thrust.

There was a reversal pivot on Fibonacci Day 5 (yesterday), which opens up the possibility of another time correlation at Fibonacci Day 8 … this coming Friday.

Before The Open

It’s about twenty-minutes before the regular open and XOP, is trading higher … further confirming we’re headed for a potential set-up and reversal (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

Biotech … Behind The Scenes

January 10, 2023 By in Biotech, BIS, BIS-23-01, David Weis, DXD, IBB, Positions, QID, SDS, SOXS, Speck-Effect, Wyckoff, ZeroHedge

The Big Reveal

Was yesterday, the infection point?

Was that the day where irrefutable evidence like this is going to stick?

Price action of Biotech Sector IBB, has posted a long awaited and anticipated reversal signal (not advice, not a recommendation).

We’ll look at that below.

The IBB, Up-Thrust & Reversal

As a reminder, in Wyckoff terms, an ‘up-thrust’ is where price action struggles above known resistance for some period of time and then reverses to the downside.

In the case of IBB, that ‘struggle’ lasted an incredible seven-weeks.

Biotech IBB, Weekly

Price action attempted to break above resistance for nearly two-months, before reversing lower.

Then we had an initial test during the week of 12/23/22 (on the daily for three days), and a secondary test last week.

Biotech IBB, Daily

The daily shows more detail on the struggle.

Point No. 1, was the initial test. Point No. 2, was the secondary test which appears to have decisively failed.

Pre-market action shows IBB, set to open slightly lower.

If it does, then expectation is for some (brief) attempt to rally as a test of the breakdown.

The Driving Force

For years, this site has not wavered in the assessment, what’s happening in this sector, will be the driving force for the entire market on a go-forward basis (not advice, not a recommendation).

Anything can happen.

It’s unknown if yesterday was ‘the day’.

What is known however, evidence is building on a massive scale. Every day, sometimes multiple times a day, we see the effects.

Positioning

This site presents the data, the insight and price action nuances. It does not give recommendations.

With that said, going short this sector is not as straightforward as the other major indices.

IBB, may be shorted directly but will likely result in a maintenance fee from the broker.

Of course, that puts one on the hook for the sector’s dividend payment (currently yielding 0.31%).

The other option is 2X leveraged inverse fund BIS.

However, this fund’s volume is thin … meaning it’s not nearly as liquid as the other inverse funds such as SDS, DXD, QID, SOXS and so on.

It’s up to the trader/speculator to participate or not.

We’re about fifteen-minutes before the open. Let’s see what happens next.

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 … Go Berserk … Again

January 8, 2023 By in Currencies, Dr. Elder, GLD, Gold & Silver, Oil, Oil & Gas, Palladium, Platinum, SLV, USO, Wyckoff, XOP, ZeroHedge

Testing The Trend

Since the lows last November, to the close this past Friday, gold (GLD) has moved higher by a decent but modest 15.4%.

Naturally, the opportunists are out telling us ‘We’ve been warned’, ‘this is it’, ‘it’s going to the moon’ … yet again.

With that backdrop, we’re going to look at the precious metals facts, not the hype.

‘Precious metals’ because there are only four that have ‘currency code’ classifications, i.e., are classified as an asset with ‘currency like’ monetary characteristics.

Currency Codes

Gold, Currency Code: XAU

Silver, Currency Code: XAG

Palladium, Currency Code: XPD

Platinum, Currency Code: XPT

The Market Itself

Way back over a century ago, Wyckoff discovered the key to understanding the next likely move of the markets was the study the market itself (not fundamentals).

Wyckoff essentially ‘locked himself in a room with just a stock ticker and phone line’.

Months later, when he emerged, ‘Studies in Tape Reading‘ was the result.

We’re going to use his insight from that text.

That is, what’s the market’s saying about itself? What’s the next likely direction?

Off The Highs

For some of the precious metals, they’re off their highs by a significant amount (percentages approximated).

Gold (GLD): Down -11%, from highs

Silver (SLV): Down -55%, from 2011, highs

Palladium (PAH23): Down -47%, from highs

Platinum (PLJ23): Down -53%, from highs

All of the precious metals are down nearly 50% or more, except gold.

In the case of Platinum, it’s near 1980s levels!

So, where’s the inflation?

Oh wait, here it is … one more time.

That’s not saying ‘money printing’ has no effect. There are a lot of moving parts. Intentional destruction of the food supply is just one of those parts.

Old School Analysis

Hypothetically, if you dropped an ‘old-timer’ into the markets at this juncture (without him knowing the ‘hype’), and showed him all four charts of gold, silver, palladium, platinum, and asked ‘what’s happening?’

What’s his response?

After a brief look at the charts, he would likely say:

‘Gold’s move higher is not being confirmed by the other precious metals’.

Note that all four metals peaked together during the inflation spike of 1980.

Ergo: At this juncture, something’s wrong.

Either the other metals are going to ‘catch up’ to meet gold or gold is going to come down to meet the others.

That is of course, unless this time is different … somehow.

With that, we’ll look at the chart of gold to see what it’s saying about itself.

Gold GLD, Weekly

We’re starting with the unmarked chart.

Note: Elder’s Force Index scale is expanded to show the nuances of GLD, price action.

Next, we see we’re at a test of the trendline in place for 16-months before the downside breakout of July, last year.

Moving in closer, we have a wedge formation prior to the up-move last week.

Is this a breakout to the upside or a throw-over?

At this point, it’s unknown.

We can see that Force Index is below where price action entered the wedge during the week of November 11th.

Less force up into resistance (trendline), paints a slightly more bearish than bullish picture.

The ‘Why’ Comes Out

As if on cue and in classic Wyckoff style, we have a ‘why‘ for the move off the lows of last November.

Classic Wyckoff, because he said the ‘why’ of a move comes out after the fact.

There you have it; China buying gold last November and December.

During this move from the recent lows, it was certainly a trading opportunity for the bulls … but from a strategic standpoint, what happens next?

The Non-Confirmation

Non-confirmations can last a long time.

For example, the Oil & Gas sector XOP, declined for eight months, from April 2019 to January 2020, before the price of oil (USO) finally broke lower.

With the ZeroHedge article just released a few hours ago, we can expect at least a blip higher at the next GLD, open.

After that, we’ll see.

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

Oil Today … Gold Tomorrow

January 7, 2023 By in 1987, DRIP, DRIP-23-01, Federal Reserve, Jerimiah Babe, Positions, Taleb, Van Metre, Wyckoff, XOM, XOP, ZeroHedge 8 Comments

Commodities, Have Peaked

First, we’ll review oil; tomorrow, we’ll look at gold.

From an intuitive standpoint, you can almost feel it.

The oil and gas sector has launched to unsustainable highs.

Behemoths like Exxon (XOM) with its 63,000 employees have gone from below $30/share to above $110/share, an increase over 280%, in just two years.

In the history of the equity, going all the way back to 1984, that’s never happened.

Even in 1987, before the crash, XOM was up for the two-year period, a paltry 108%, by comparison.

Now, data is coming in nearly by the day about collapsing demand, layoffs accelerating, and inventories piling up.

The latest from Steven Van Metre, at time stamp 4:25, discusses just how fast the downdraft is, and will be.

Important Note:

Before we leave the Van Metre link above, at time stamp 8:50, the assertion is made of what the Fed will do when slower growth data comes in. i.e., interest rates will be halted or lowered.

Nassim Talib called this kind of thinking “Normalcy Bias”.

The opinion of this site is, it’s a trap. Thinking what happened last time, will happen this time.

Let’s mentally bookmark this post and come back six-months from now to see what happened.

We’re in uncharted territory and other agendas are at work.

Like ‘bread and circuses’, the ‘pivot’ discussion is a distraction … keeping the proletariat placated.

Demand Collapse

We’ve got demand collapsing on a daily basis right in front of our faces and yet, it’s a big mystery (to some).

What’s not known, is how the general population will react to undeniable truth when it finally hits, en masse.

We have a good hint of what’s in store as reported by Jerimiah Babe during the first minute of this report.

Moving on to the Oil & Gas Sector.

Oil & Gas XOP, Weekly

The weekly chart shows the multi-year resistance area that was tested (and rejected) back in mid-June, last year.

The next chart shows we also have a terminating wedge.

Price action has come back to the lower boundary; suggesting a breakdown is a probability.

If we get a breakdown, measured move support is identified at approximately -47%, below current levels.

Strategy & Trading

Obviously, the charts paint a bearish picture.

Over the past week, XOP was covered here and here.

The first link discussed how price action was very close to making a new daily high. That happened the next session (Friday) and indeed, it had Wyckoff ‘spring’ characteristics.

Price action moved higher and closed higher for the day, but it did not post a new weekly high … keeping the bearish case on the table.

A popular leveraged inverse fund is DRIP (not advice, not a recommendation).

At The Close

As this post comes to a close, a quick check on ZeroHedge turns up this: ‘Tipping Point‘

We’ve jumped over ‘recession’ and have gone straight into crisis and depression.

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