That was a phrase from the late David Weis, used during his training session video (link here).
That’s what we’re gong to do.
Biotech (IBB) is nearing support and it was thought the overnight would result in an obvious gap-down open, exit signal.
However, with just about a half-hour to go before the regular session, markets maintained their positions overnight keeping the door open for continued decline or counter-trend action.
All markets, the S&P, Dow, Nasdaq, (and biotech) are pivoting lower from insane valuations. We could be at the very beginning stages of a sustained deflationary move.
One example of how such moves behave, was the oil market in July of 2014. The tracking fund USO, had nine successive down months (declining over 60%), before a significant retrace.
With that in mind, we’re setting the LABD stop at the prior session low of 21.80 (not advice, not a recommendation).
With an LABD entry point at 18.08, being stopped out at 21.80, would yield a gain around 21%.
So, we’ll leave it there and move on to other opportunities.
The weekly has IBB, nearing support around 140 – 142 (dashed line). We can expect price action to hesitate as (or if) it encounters those levels.
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.
Markets might continue their decline in overnight and pre-market.
If pre-market or early regular session has IBB trading near its target level, we’ll plan on exiting (LABD) in response; not advice, not a recommendation..
Every other active trader sees the H&S at this point and is probably waiting to close out (their shorts) at or near the bottom.
If so, it may result in buoyancy and the trade will start to degrade; exit is warranted under those conditions.
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.
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.
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.
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.
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 financial press is rolling out the usual suspects; bonds yields are going stratospheric and hyperinflation’s just around the corner.
A more likely view, one that’s actually based on reality, the price action itself, bonds just changed hands; from weak to strong.
Those selling or going short bonds (weak hands) at this juncture are potentially left holding the bag in a big way.
Taking a trip back in time to Livermore’s day (Reminiscences), he stated time and again, the large speculators could not enter or exit their positions at will.
They needed to have some kind of ‘event’ with heavy volume so that it would mask their moves.
It looks like we just had such an event.
The weekly chart of TLT, shows two major volume spikes. One where bonds reversed lower and now … a potential reversal to the upside.
We’re dealing with probabilities and over two-hundred years of market activity (since the Buttonwood tree).
Huge volume spikes have significance. They typically signal a pivot or the start of one.
Using that reasoning, we may have seen confirmation of rotation not only in bonds but the markets themselves; The S&P, Dow, Nasdaq are pivoting lower, with bonds and the dollar reversing higher.
Summary:
The futures market opens in a few hours. It’s typically a light-volume affair for bonds.
At times, Steven Van Meter presents in his updates how bonds have been typically slammed lower in the overnight.
That type of action has been going on for months. We’ll be looking to see if there’s a change of character.
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.
IYR has reversed with a decisive ‘outside-down’ week.
This sector has likely seen its highs for the year and probably its all-time (recovery) highs.
The latest news from Steven Van Metre does not paint a good picture for the economy or the markets (bonds excepted).
Jerimiah Babe (J.B.) has also posted an update on Los Angeles. It’s a human and economic tragedy. Unfortunately, this is where the Cadillac has gone off the cliff.
We’ve continually held to the stance, there’s no recovery.
The “recovery”, is a mainstream narrative intended to keep the herd focused in the wrong direction and on the wrong things.
Judging by the hysteria with small cap short squeezes, physical silver and bitcoin (kind of hard to access when the power goes out), the promulgator to the proletariat, the mainstream media, has done an excellent job.
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.
Of course, it’s all part of the plan but that’s a topic for another time.
What’s shown in J.B.’s video(s) is that one after another, commercial properties are boarded up and fenced off.
One might think it’s only progressive utopia California that’s having a rough time; taking a look at comments to his videos shows otherwise.
Just one example taken from the video link:
“Even if the U.S. lifted all lockdown restrictions 100% TODAY, I still think for many companies, its too late.”
The economy is not coming back … not in our lifetimes anyway.
No matter what happens, re-building will take many decades. Even so, the destruction has to be completed first.
We’re nowhere near downside end (economy, markets or otherwise).
On Thursday you would’ve thought from the news, we just collapsed by 50% or more. In fact, the S&P (SPY) was only down -2.41%.
Think about what happens we get the hit … that does not come back.
As early as May 12th of last year, this site began to note the similarities of the markets to August of 1987. In retrospect, that post (and the ones that followed) seemed a little premature.
It’s a different story now.
Markets even more extended; bond rates higher.
Throughout the years, going back to the early 1900’s, the professionals always preferred down markets. Profits (and fortunes) can be made much faster and with more reliability.
Fear is much easier to gage (on the charts) than greed.
With that in mind, we can look at real estate with a clear head and assess the opportunities.
It turns out, not only has IYR got itself into a terminating wedge, it’s doing so at Fibonacci time frames.
During the past six-weeks, my firm (link here) has been positioning in and out, and back in, several times using short fund DRV (not advice not a recommendation).
Just yesterday, before IYR broke decisively lower, that DRV position was increased to its maximum level thus far.
Obviously, a new high in IYR is not anticipated. The reason for selecting real estate as a strategic short (unlike the LABD swing trade) is for the downside potential.
Inverse leveraged funds work best during a sustained, directional move. It remains to be seen if DRV was a good selection; not only for a trade vehicle, but for the anticipated collapse in real estate.
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® 