Category Archives: Wyckoff

Elliott Wave: American Tower

March 28, 2021 By in AMT, DRV, IYR, Jerimiah Babe, Paul Harrell, Prechter, Real Estate, S&P 500, Van Metre, Wyckoff 1 Comment

Paul Harrell likes to start his videos with:

‘The next twenty minutes are going be long and boring. You might want to skip to the end to see the conclusion.‘

His rabid and loyal fans then proceed to hang on every word of his self professed ‘boring anecdote’ until the very end.

Not saying this site’s in the same league as Harrell’s.

Just saying, the following is going to be a tedious discussion of American Tower (AMT) and how it just might be ready to start an Elliott Wave III, down.

Market Extremes:

Its been no secret. The markets are at price levels and valuations never before seen.

In this site’s opinion, going long anything, is insane.

There could be a break, upset, world event, container ship run aground (oh, wait…), cyber attack, volcanic eruption (oh, wait …), major earthquake, nationwide weather freeze (oh, wait…) food supply disruption (oh, wait…) bond bear raid (oh, wait…) currency devaluation, or any myriad of disconnects that would instantly change the dynamic.

Change the dynamic in such a way as to make low-risk long exit, or short positioning impossible.

This site has documented several times where major brokers have already gone off-line as a result of markets fluctuating to the upside.

What happens when it turns down? Good luck getting out.

Looking for the (short) entry:

Its been an on again, off again, and back on again affair with shorting real estate, IYR. Anecdotal evidence such as Jerimiah Babe’s updates from his area, show the market’s been vaporized and is not coming back.

We’ve shown from a Point & Figure chart perspective, IYR has built significant price action congestion.

In Wyckoff terms, congestion equals potential.

The IYR index has built enough congestion that if/when the reversal comes, price action has potential to decline below the 2009, lows.

American Tower (AMT) Symmetry:

Now, for the analysis of AMT.

We’re going to start with the daily chart which has an interesting pattern of equal distance moves (or waves):

This equal move structure gives a hint that something’s up. The market’s moving in an orderly fashion. But what order?

To add more intrigue, we’ll go to the weekly chart. We see each retrace of the two initial waves, was Fibonacci 62%.

The last retrace (up to Friday’s close) is essentially 100%.

Looking up Elliott Wave “equal waves” turns up this presentation. It helps some but does not cover the current situation. The take away from the video is that equal waves do occur.

Looking at the daily close chart of AMT gives us this:

The Wave 1, down is placed at the low extreme. Price action then corrects to pivot (magenta oval) at the Fibonacci 38.2% retrace level.

It’s a near perfect retrace.

The reason to think AMT just finished a complex correction that terminated at “z” which is also “2”, is the structure of the fifteen-minute chart below.

The first chart is unmarked except where price action changes character:

Then we put in the Fib projection tool at that location; the inflection point, to get the following:

Incredibly, the top of Friday’s price action is also a Fibonacci target (423.6%) projection.

Getting back to the daily chart and labeling it using the above information gives us this:

Removing all but the labels is more clear:

There could be other ways to label the structure. It may become (very) apparent at the next open whether this interpretation is correct.

However, coupled with yesterday’s analysis of IYR, and its technical condition (at the extreme), we get the sense we’re close to some type of price action hesitation or outright reversal.

Summary:

We’re short this sector via DRV (not advice not a recommendation).

Price action appears to be at extremes and is meeting Fibonacci and support-resistance levels simultaneously.

Not related but an interesting coincidence (maybe): Van Metre’s update on Friday night:

“Is This a Sign Real Estate Prices Have Peaked?”

The futures markets just opened … S&P down 7-points. 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.

Dollar Rally

March 26, 2021 By in Basic Materials, Bonds, Cramer, DJUSBM, Dollar, Gold & Silver, Interest Rates, IYM, Livermore, Project Stimulus, Real Estate, SMN, UUP, Wyckoff

Wasn’t the dollar supposed to crash … go to zero … implode?

This is the flip side of the hyperinflation narrative.

Dollar implosion like hyperinflation, not happening.

Way back in 1921, Livermore said to Wyckoff that his assessment of the markets was, ‘it’s all about deception’.

Nothing has changed.

It’s in the best interests of those controlling the narrative to have as many as possible (always) on the wrong side of the trade.

We haven’t posted this link in a while … the video keeps getting deleted but re-appears every so often. This is how it really works … Period.

Note the date stamp on the comments. The video’s at least 13-years old and it’s still relevant today.

So, the dollar’s in a rally.

Not only that, momentum indicators, MACD, on the monthly, weekly, daily, all point higher. It’s in a rally and a sustainable one.

It’s completely opposite the accepted narrative.

You can feel the tensions building.

Bonds could be reversing but have already pushed rates high enough (long enough) to choke-off critical sectors of the economy like here and here.

Now we see the dollar has bottomed as well.

It looks like a strong multi-month (or year?) rally. Correspondingly, gold is weak. The overall markets are stretched to ever-livin’ extremes; never before seen.

Whenever this baby pops, try logging on to chaos, or exit any position (except maybe for the long bond).

Our approach then (not advice, not a recommendation), is continue work on positioning short. So far, the ‘project’ is taking small hits in those attempts. We’ll see how basic materials (SMN) works out today.

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.

Biotech Technical Discussion

March 24, 2021 By in Biotech, IBB, LABD, Project Stimulus, Wyckoff

Yesterday’s swift move lower in IBB looks like the start of the next leg down.

Update 10:34 a.m. EST in red below:

Closer inspection however, shows biotech could pivot and move to higher levels … if only temporarily.

We’re looking at the 30-minute chart of IBB. Yesterday’s action penetrated minor support and stopped dead.

When price action behaves in that manner, it puts the index in what Wyckoff called ‘spring position’ ready to move higher.

Then we have the wide 30-minute (red) bar from the session; likely to be tested. To do that, action needs to move higher.

The target area is near a 62% retrace of the entire down move from the high on February 10th, to the low on March 5th.

Note, yesterday was a Fibonacci Day 13, from that March low.

Even though IBB’s likely to move higher, we’re leaving it alone.

If action gets to the target, we’ll be ready to short (via LABD) if there’s opportunity.

Update:

It’s not called “The Danger Point” for nothing.

Price action penetrates deep below (minor) support effectively negating the ‘spring’ scenario discussed.

We’ve now penetrated below another support level

Price action can still spring upward from here … although probabilities appear to be fading.

Either way, we’re not interested in going long at historic valuations.

Separately, our ‘project’ has maintained short real estate via DRV (not advice not a recommendation), to be covered in a later update.

Stay Tuned

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.

As Promised, Amgen

March 17, 2021 By in AMGN, Wyckoff 1 Comment

AMGN’s at a confluence of Fibonacci projections.

Yesterday’s update hinted that AMGN was in a special situation. This is a brief detail of conditions.

First, let’s understand that momentum indicators, MACD on monthly, weekly and daily, all point higher.

If we’re at the downside reversal, the inflection, we’re documenting in real time how it’s taking place.

On the chart, two Fibonacci tools are in use; a retrace tool and a projection tool.

The retrace is from the all time high posted on 1/28/21, to the most recent low on 3/4/21.

The projection tool has been placed on the recent upward action from that low and estimating where the a-b-c (corrective) waves are terminating.

The market itself determines what levels are important. This is one of the main Wyckoff tenets presented by him over a century ago.

It’s clear price action is hesitating at the confluence of a 38% retrace and 100% projection (‘a’ and ‘c’ waves equal) on the chart.

Since AMGN is the largest cap in the IBB, ETF, its behavior has an outsized effect.

A downside reversal from this point, the 38% retrace level, would indicate significant weakness for AMGN.

We also have today as Fibonacci Day 34, from the all time high.

The retrace high may have been yesterday or we may get it today … right around 2:00 p.m. EST, at the Fed announcement.

Update: As this was being written, AMGN just posted a new retrace high.

Stay Tuned

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.

High Yield, The Canary

March 14, 2021 By in 1987, Biotech, HYG, IBB, Jerimiah Babe, LABD, Positions, Wyckoff 1 Comment

The canary in the coal mine could be High Yield, HYG

Since early last year, this site has been discussing growing parallels of the current market environment to that of August 1987.

Just recently, ZeroHedge began to pick up on the idea as well.

What’s becoming very obvious when looking at 1987, we’re in something much larger; possibly an order of magnitude (or two) larger.

Here’s the latest from Jeramiah Babe. Important time-stamps below:

2:15, Crypto (try it when the power goes out)

3:00, Inflation

3:30, Agricultural prices

3:40, Lumber prices

4:10, Middle Class destruction

5:00, Last longer than Great Depression

7:30, Dramatic shift (never to be the same)

10:00, “We’re in 2021 now. Anything is possible“

A quick review of longer term momentum indicators on the major indices (or ETFs), below:

Technology based indices all have significant downside momentum.

The financial press may have pawned this off as ‘rotation’. Of course, that remains to be seen.

Our view, high yield tells us something much larger than a sector rotation’s occurring.

It’s possible, the most debt (interest rate) sensitive indices are reversing first which could be a sustained, long term reversal.

The HYG weekly chart pattern is similar to the prior reversal (magenta ovals). This time however, MACD has spent over nine-months in a divergence and has crossed to the downside.

There could be a new high … low probability but it could happen (after all, it’s at support). If it does, weekly MACD may post an even larger divergence.

In response to the HYG reversal, we’re watching (and are short) the biotech sector, IBB (not advice, not a recommendation)

Of the three noted above with negative momentum, IBB is the weakest. Last Friday’s action has tentatively confirmed the resistance areas and trading channel reviewed in this update.

Friday’s IBB lower action was nearly imperceptible but it was there. Major reversals can happen this way … a little at first.

Wyckoff said it in 1910, ‘It’s as if the weight of a feather can determine the next direction’.

We’ll see if there’s follow-through to the downside on Monday.

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.

Off With Their Heads

March 9, 2021 By in IBB, SOXS, SOXX, Wyckoff

Head & Shoulders patterns are showing up in several markets.

First, there’s biotech IBB … and now the SOXX.

The SOXX is higher in pre-market around +2.5% , +2.70%, near 385.25.

Conversely, inverse SOXS is down -9% to -10% near the 14.00 -area.

Today could be the day where risk is minimized to position short via inverse SOXS (not advice, not a recommendation).

If SOXX remains below yesterday’s high of 397.71, it has set itself up to break the neckline. Once that’s completed, we’d then have a measured move lower to around 320.

If short via SOXS, the stop would theoretically be yesterday’s low of 13.21.

We all know however, inverse funds and especially the 3X versions, have significant negative erosion.

If during the regular session, SOXX price action persists throughout the day near yesterday’s high (397.71), inverse SOXS will continue to erode below its own prior daily low.

A different view is the Right Shoulder has not been completed. We’ll know that if SOXX makes a new daily high.

It’s a myriad of scenarios and the professional understands there’re an infinite number of outcomes. However, at times, risk is reduced enough to take a position on a probable direction.

At this juncture and given the above conditions, the most probable direction is down.

One last caveat.

SOXX has broken below well established support. That puts it in Wyckoff spring position. The market will automatically attempt to rally as we see in the pre-market.

Based on the conditions described, we’re expecting that spring attempt (to new all time highs) to fail.

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.

Test, Then Reverse

March 8, 2021 By in DRV, IYR, Real Estate, Wyckoff

Today’s price action in real estate (IYR) looks like a test of the failed breakout (up-thrust) from February.

This session, price action came all the way back to support (87.90), which is now resistance.

The important part, the level did not hold. Late in the session there was erosion and retreat to close well below the day’s highs.

This type of behavior is near textbook for a significant reversal.

From a trading perspective, the short position via DRV was maintained (not advice, not a recommendation) except for reducing the position by about 2.5% … essentially negligible.

Today’s test and erosion is one of those few times where probabilities are high; the market’s tested the up-thrust (failed breakout) and we can expect prices to decline from here.

One last note adding weight: Today is Fibonacci Day 8, from the high on February 25th.

With conditions noted, posting a test high today, then backing off … indicates downside ahead.

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.

Failed Rally Attempt: Real Estate

March 2, 2021 By in Bonds, DRV, Interest Rates, IYR, Positions, Real Estate, Wyckoff

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.

A short list of what has been found is below:

Mortgage market.

Mall values crash.

Bond tipping point.

Bond market calls Fed’s bluff.

U.S. Spending plummets.

Rising yields are now good for the markets?

IYR could still rally from here. However, with the conditions described in this post, it’s not likely.

Summary:

We’ve been short this market in a big way (not advice, not a recommendation) via DRV. The plan is to increase position size as long as price action allows low risk entries.

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.

Trading Tip: Trailing Stop

February 23, 2021 By in Biotech, IBB, LABD, Wyckoff 1 Comment

Here’s one method to use for a trailing stop; Have the market itself tell you were it goes.

The reason brokerage trading platforms have so many options with an endless list of indicators, is that’s what the (retail) public wants.

It has nothing to do (as usual) with what works best.

Wyckoff himself said the market defines the course of action. The “tape” as he called it, was the master for decision making and no other.

Let’s look at what the tape is saying about LABD, the 3X inverse EFT of Biotech (IBB).

The sector has already been traded profitably last week. Shown on the chart below is another entry. Also shown, is what may be the most efficient method for stop placement.

For LABD over the prior weeks, we could have extracted a large part of its move using a trailing stop based on the 4-Hour chart.

LABD itself has defined that 4-Hour looks best at this point in time.

So, that’s what we’ll do (not advice, not a recommendation). The stop will be at the nearest 4-Hour low (currently, 16.27).

At mid-session today, we’ll move it up to the next 4-Hour low and so on until stopped out.

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.

Miners, GDX Accelerates Lower

February 17, 2021 By in DRV, GDX, GOLD, Gold & Silver, Gold Miners, IYR, Real Estate, Wyckoff

With GDX posting a new weekly low (below 33.23) early this session, it’s helping to confirm a pivot and acceleration to the downside.

Bullish or bearish, it’s a crowded trade that we’re avoiding (not advice, not a recommendation).

It took over a week of oscillating price action before GDX decided to post below the February 4th, low.

Even so, when an established low is penetrated, it puts the market in “Wyckoff Spring Position’.

That means there’ll (potentially) be some type of rally or rally attempt. If that happens, it’s just more oscillations that result in erosion of leveraged inverse funds.

Other areas of the market are performing better on the downside. Real estate IYR, looks like it may post a narrow range day (as of mid-session).

It’s typical action when at support. If there’s no break lower today, then IYR could make an attempt higher at the next session.

Based on previous analysis, that attempt (if it occurs) is expected to be short lived.

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.