‘Spring-to-Up thrust’ is a common price action phenomenon.
Credit goes to the late David Weis for noting this behavior in one of his daily market updates from years past.
Now, we see it in action with SOXX.
As with airlines, semiconductors are highly susceptible to economic changes. Both operate on thin margins and have high capital costs.
Airlines (at least UAL and AA) have never recovered to new all-time highs. Maybe the semis went higher because of all the contract tracing that’s being projected.
However, noted in yesterday’s update, there’s a chance there won’t be much to ‘trace’; we’ll find out very soon.
SOXX is at the danger point; risk of a short position (not advice not a recommendation) is at minimum.
As an extra reminder, we’ll add a frequently discussed theme for market tops: ‘Holiday Turns‘
Emperical data shows that markets tend to reverse before, during, or just after a holiday week.
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.
At this point, especially after witnessing the ‘lock-step’ positioning of major corporations over the past year, one thing is obvious:
They’re all operating in concert.
The coordinated message is that everything’s getting back on track. No need to worry.
See how ‘normal’ things are? Big companies are even ‘planning’ for the future. Stay calm and take no (preparatory) action.
Indian Summer:
The reality is, just as this link suggests, we’re in an Indian Summer. That is, we’re between two extremes.
The past year can be viewed as the summer heat. Then, we’ve just had a break (advent of fall/winter) with restrictions being lifted … but soon the figurative and literal winter will come.
Think that’s a bit much? Well, let’s just take a look at one item.
The video in the link above, mentions the need for ‘body bags’; that we’ll run out … sounds insane.
The long term, Quarterly chart shows the extent of the technical damage.
The 80% drop could be the beginning of a multi year (maybe decades long) decline.
If it was a crash (like lumber futures), it will have the typical crash-like structure.
That is: An initial swift, decisive decline; followed by retracement which then rolls over into a sustained and long term move lower.
Meanwhile, the S&P 500, is hovering at its all-time-highs.
Not only has UAL not made a new all time high (posted way back in December of 2018), the weekly chart shows it’s formed a terminating wedge.
At this point, it’s ‘rolling out’ of that wedge indicating sell or sell short; Not advice, not a recommendation.
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.
However, those fully immersed in their evil, are not aware when sentiment changes.
How can they be?
They don’t have the discernment (a God-given gift), that lets them know when the jig is up.
The statements made by the organization’s CEO listed in the title block, sorry, you’ll have to do your own search, we’re not providing links for what should be obvious reasons, has instantly brought the entire ‘charitable foundation’ schtick under suspicion if not outright exposure.
The visceral response to those statements was immediate.
Complexion of the so called ‘charitable’ industries has forever changed.
Has sentiment for the biotech euthanasia project changed also?
As always, price action is the final arbiter. Anything can happen.
Chart Analysis: Biotech, SPBIO
At this juncture biotech and specifically SPBIO, has pivoted decisively to the downside.
As with yesterday’s update, the daily SPBIO chart is inverted and annotated:
The ‘repeating trendline’ concept that’s been discussed for nearly the entire seven week corrective period, is included above.
This time, it looks like we’ve reached the right-edge.
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.
Over the past seven weeks, as the biotech indexes worked their way through a corrective retrace, there were no guarantees we’d get such an obvious reversal.
A market disconnect could have happened at any time (and is still a possibility).
At this juncture with SPBIO, penetrating and rejecting a prior resistance area, we’re likely on the way to much lower levels.
The daily SPBIO is below. The next chart has it inverted with notations added:
Inverted. Notations added:
We see penetration below the blue line support area. This sets up the Wyckoff spring condition (up-thrust, non-inverted).
The last update, showed thrust energy already divergent; set for reversal.
Note:
The criminal behavior within this sector continues to mount by the day.
Operating with impunity.
When, how, or if that breaks out into the open, is the big unknown.
SPBIO, Character Change:
One of the benefits (if you can call it that) of having a position that’s eroding by the day, is that you get very intimate with the behavior of price action.
Consider it an ‘opportunity’ to focus the mind.
The typical behavior of SPBIO (and inverse LABD), is to establish the day’s trading range within the first two hours of the session.
Consider those two hours as the ‘head fake’ as that range is then eroded throughout the rest of the day.
Today’s session has been no different. A wide range established early but here’s the change; There’s been little, to no erosion.
As if on cue, during the third hour of trade, SPBIO attempted to erode the range. Inverse LABD, shown below.
However, that attempt appears to have been rejected:
As of this post, price action can’t get itself (appreciably) back into the early morning’s range. The character of the index has changed.
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.
The very last thing you’ll need in that environment, is a stack of metal (not advice, not a recommendation).
Personal anecdote, skip to GDX Chart, if not interested.
These updates are originating from the North-Central area of Texas (DFW). When the historic cold snap rolled through this past February, the power went out repeatedly.
The first thought was not: “I’m sure glad I have my stack of silver to get me through”
No. The thinking was (in this order):
Food, water (water was second as there was plenty of it just outside as snow), munitions and ‘delivery mechanisms’, cash in case the gas station was operational … which is was not and then lastly, heat.
The location was using natural gas for heating and was available as long as there was power
Precious metals were nowhere on the list … not even considered. They had nothing to do with the situation at hand.
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.
In the entire history of the market, that’s never happened before, either.
Biotech Backdrop:
We’ve got empirical and anecdotal evidence pointing to the real objective of the ‘experiment’; now, we’re fortunate enough to have a data analyst doing what the medical establishment used to do.
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.
Sentiment can’t be seen on the chart. One can guess but it can’t be measured directly.
Sentiment change comes first.
That change in turn, results in a change of volume, i.e. ‘commitment’.
Then, after commitment dissipates, price is next.
That looks like the current situation with biotech and specifically inverse fund, LABD.
In what may be an idiot or genius move (depending on outcome), the short in biotech SPBIO (via LABD) has been maintained throughout the current down thrust; not advice, not a recommendation.
The reasons for that decision have as many layers as the proverbial onion. Not the least of which, is a market break anywhere from 20% to 50% (in our view) can happen at any moment.
‘Never happened before’, one might say.
Oil futures in their entire history have never gone negative before, either.
Bonds, in their entire history have never been shorted by four-standard deviations before, either.
A world-wide coordinated push to euthanize the entire population has never happened before, either.
Margin debt and valuations have never been higher before, either.
Underlying liquidity has never before been removed to the current extent, either.
So, we each have our own reasons.
The firm’s main account (not the Project Stimulus account) has drawn down about – 13%, on the current short position.
A core position has been maintained but small amounts have been removed and added based on price action.
When the anticipated gain, is high hundreds of percent and maybe above 1,000%, the draw down above, looks acceptable considering the (potential) opportunity.
On to the chart:
The daily chart of LABD, shows both net downward price action and thrust energy are dissipating.
Note the ‘Force Index’ scale has been accentuated to better show the divergence.
We’re looking for price to move back higher to test support/resistance areas.
If or when it does, the plan (as has been from the beginning) is to continue to add LABD until volatility makes it prohibitive.
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.
Crisis will create opportunity for leadership; at this point, there’s not much if any in the financial sector (i.e. ‘best ever’, above).
When the big melt-down hits, leadership’s not coming from the ranks of the ‘compliant’ or the enforced mediocrity of the ‘fiduciary’.
Therefore, we can all take our cue; like this Irish couple who took it upon themselves, to separate from the crowd and escape quarantine.
With that in mind, on to the markets:
Analysis, Biotech
As we head towards the close with about twenty minutes left, the S&P 500, has posted an all-time high.
Biotech, SPBIO and IBB, are still well below their highs but are nonetheless at a point of instability with today’s action.
As the Hourly chart of LABD shows, we’re at the danger point and in spring condition:
A push back into the range above support, is significantly bullish for LABD and bearish for SPBIO.
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.
It’s natural market behavior to rebound after a breakdown low.
Stops are hit; Amateurs sell and sell short. Professionals cover their shorts; go long or look to short again.
It’s what happens next, that’s important.
The market, DIA will likely come back to test the support/resistance boundary (blue line) in the daily chart above.
At this juncture, even though Dow Theory Sell was triggered (not advice, not a recommendation) with DIA closing below support last Friday, from a Wyckoff standpoint, DIA is in spring position.
Spring position; the market’s poised (but not guaranteed) to move higher.
If DIA comes back to test the boundary (typical behavior), there are two outcomes:
No. 1:
The test holds; price reverses and we’re on to potential new highs
No. 2:
The test fails; price re-penetrates the lows and then heads (much) lower.
Adding weight to the second scenario, DIA has already posted a new monthly low. That’s not happened since October last year.
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.
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® 