One Way Pockets

November 19, 2020 By in DUST, GDX, One Way Pockets

One hundred-three years ago, a brief 64-page text was published where a broker at a trading firm analyzed client accounts.

The year was 1915, and the market was at all-time highs.  The purpose of the analysis was to see how the active clients fared after a record breaking run-up.

“Like a great majority of our customers, these traders had been bullish on the munition [World War I] and standard industrial stocks during the great speculative boom of that year, and now, with the stocks in which they had been operating up from 15 to 100 points each, their profits were relatively small and their commitments [i.e. margin] larger than at any preceding stage of the movement.”

Basically, these customers were the herd.  Profits, if any, were slim and they are all-in at the high … and on margin.

Just five years later, that same market had lost nearly two-thirds of its value and is down over -61%.  The book is called One Way Pockets. 

Fast forward over one hundred years. We have The Money GPS with this report; Fund inflows at the highest in 20-years and nobody going short.  Well, almost nobody.

A huge amount of the population is out of work and most likely relying on the markets to make up the difference.  Remember back in the day, when it was bad if there were 350,000 jobless claims?

The middle class is in the midst of destruction and will (when it’s all over) basically be eliminated.  It will usher in, ‘neo feudalism’. 

It’s not a new idea as Prechter predicted as much nearly twenty years ago. 

This backdrop or macro if you will, has produced the sentiment driving the analysis on this site as well as more in-depth technical data on the host firm’s website.

Taking all into account, under the conditions of today, this moment, we’re short the Senior Miners (GDX) using DUST as the trading vehicle (not a recommendation, not advice).  The stop has been moved up to DUST 19.58.

Quotes used with permission.

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.

Dazed and Confused

November 18, 2020 By in DUST, GDX, GLD

That’s what hyperinflation gold bulls must be feeling; dazed and confused.

Certainly, we all know from a long-term macro perspective, all fiat currencies go to zero. 

It took the Roman Empire somewhere around 300 years to debase their currency to zero.

So, it’s what happens in-between; that’s the important part.

The old trading books like Reminiscences of A Stock Operator and Studies in Tape Reading are replete with speculators being on the wrong side of the trade.

Some of them realize the error, get themselves righted and back on the direction of trend.  Others, like in one Livermore example (the cotton trade) go bankrupt.

Just to see how big the hyperinflation crowd is, we’ve added up the total number of subscribers to bullish YouTube channels listed in this update. 

That list for sure, is a small fraction of bullish ‘content’ available.  At a total of 674,000 subscribers, it’s already a huge number.  The actual size of all such content is most likely in the millions.

Note the word “content”, is amorphous.  It just means ‘there’s something in there’.  It does not mean that ‘something’ is of any use. 

When reading through the old trading stories, we see the great speculators operated alone. At times, they employed a support staff of ‘board boys’, writing quotes down on the chalk boards but not much else.

If you’re alone, direction changes happen instantly. Changing direction that fast for millions … not a chance.

At this time in the pre-market (9:03, a.m. EST), gold (GLD) is set to open lower with GDX indicating lower as well.

Looking at the chart of GDX, we’ve got a possible trend line. 

Such lines make things a bit easier.  If there is confirmation on the way down, we maintain the DUST trade (not advice, not a recommendation); until the trend is broken.

Current stop (not advice, not a recommendation) is set at DUST 18.92

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.

Get Right … Sit Tight

November 17, 2020 By in BTU, Coal, DUST, GDX, Livermore

That was Livermore’s adage nearly a century ago.  Find conditions for a sustainable move and get in.  Then wait and wait some more.

Going on, he states that is was not the thinking that made him money … it was the ‘sitting’.

The short entry on GDX was initiated with DUST (2X Inverse, GDX) at DUST 18.86.

Initial stop (not advice, not a recommendation) was very tight at the session low, DUST 18.45. 

Price action the next session (yesterday) pulled away from entry levels and the stop was moved to 18.56.

Today’s pre-market session (8:54 a.m. EST) shows continued downside for GDX, with DUST up correspondingly. 

If there’s a higher close in DUST, we’ll move the stop again.

With the overall markets, S&P 500, Dow, NASDAQ, at or near all-time highs, the precious metals sector seems to be leading the way lower.

If the rest of the market reverses, downside action in the mining sector could be dramatic indeed.

In other markets, it appears that Peabody Energy (BTU) may have finally found its low; from top to bottom, a -98.33% decline. 

Analysis of BTU to be forthcoming before the end of the 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.

Gold Projections: Lower

November 16, 2020 By in DUST, GLD, Gold & Silver 1 Comment

In the overnight and early morning, gold futures GCZ20, posted a new daily high and a new daily low:  Outside down. 

Gold continues its move lower.

Before we can begin to get downside targets for gold, we have to go way back to the original start of the gold rally

Back to January 20th, 2001.

Gold reached a low near 254/oz – 255/oz. 

Using that knowledge, we can create a Fibonacci projection tool for the chart of GLD.

The GLD data on the chart does not go back that far.  So, we have to improvise.

Taking the Fib projection tool down to the 24 – 25 area of the chart and then identifying a major top of the move during the financial crisis of 2007 – 2008, gives us the chart shown below.

Expandable version of both charts, here

Note the multiple price action contact points on the 61.8 projection.  This area is an axis line.  The market oscillated around this area for nearly 10-years, before heading on to new all-time highs.

The axis lines and reversal points on the chart provide confirmation we have selected the price action waves correctly.

Using the same 25-area on GLD, we’re gong to remove the projection tool and use the retrace tool and then zoom in using the weekly chart.

That chart is below:

There is a lot going on with this chart.  Note the wide, high-volume bar.  Volume for that week was about double from the week prior.

Markets tend to go back to these areas for a test.

That area also represents a Fibonacci 38.2% retrace of the entire move off the February 2001, lows.

On top of that, a retrace to GLD 130, is a near exact -33% from the highs. 

If that weren’t enough, price action getting to that level would automatically set-up a Wyckoff spring (reversal) condition by penetrating the support area shown.

Will this all happen?  Obviously it’s unknown at this point. However, it does give us context.

As always, price action is the final arbiter.  We’re short on the GDX, the Major Miners via DUST (not advice, not a recommendation).  Our original stop was probably too tight at just 0.41 points from entry.

We’ll see how it works out.  Certainly, we are at another danger point.

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.

Impulse Power

November 15, 2020 By in DUST, GLD, Gold & Silver

Deflationary impulse is a term that is used to describe the potential decline in gold and silver prices.

If that’s what’s coming, it looks like it’s already started.

The weekly chart of GLD below, shows the long-term action in the sector. 

We have a trading range that formed during 2013 – 2019.  That range gave a projected ‘measured move’, to the 185-area for GLD.

The target has been met.  The bullish trade is over and now something else is being created.

That something from the circled area shown, expanded at the bottom of the chart, appears to be a reversal (Wyckoff up-thrust) condition.

The up-thrust was tested early in the reversal (first arrow) and this past week looks like a secondary test.  Secondary tests do happen.  Not too often but its acceptable market behavior.

In the updates here and here, the overnight futures price action was used to determine this past Friday, 13th, was a 38% retrace of the most recent down move; indicating weakness.

Anything can happen. GLD could open higher on Monday and somehow power its way through the down-trend line shown in Friday’s update.

However, probabilities based on the combined analysis point to continued downside action.

If we get a decline, how far would it go?

Price action permitting, we’ll cover downside targets in the Monday pre-market update.

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.

Testing: 1, 2, 3

November 14, 2020 By in Bonds, GLD, TLT, UUP 1 Comment

The dollar has reversed and is now testing the lows. 

Conversely, when we look at the price action of gold (GLD) its collapse exactly mimics the dollar’s reversal.

Taking into account the futures market activity in gold, it made new daily highs last week during the overnight session, Sunday-to-Monday. 

Using that knowledge on GLD, (adding it to price action) it retraced to 38%, of the recent down move this past Friday.

If we’re in a real bona fide reversal of the dollar and gold (posting more confirmation on gold tomorrow), then expectations are for continued gold downside during the coming week.

The dollar, bonds and gold, at this juncture are moving in tandem:  Dollar and bonds up, gold (and silver) down.

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.

Gold Rally Failing

November 13, 2020 By in DUST, DXD, GDX, GLD 2 Comments

At this juncture (2:40 p.m. EST), price action in GLD has verified the down trend and is pulling away; confirming that last week’s action was a major trap for the bulls.

Although not required by this site as there are no recommendations or advice, as a courtesy housekeeping notes are provided:

The DXD trade was exited at about break-even. Price action is moving too low (DIA higher) for continued maintenance on this trade.

A short position in the mining index GDX (Major Miners), was opened at DUST 18.86, when it bacame obvious that GLD was pulling away from the trend as shown.

Hard stop DUST, 18.45 (not a recommendation, not advice)

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.

Revelation 6:6

November 13, 2020 By in Corn, The Speck, Wyckoff 2 Comments

When a stock market trader starts quoting Revelation, you know it’s bad or about to get that way.

That’s what we have here (time stamp 14:20) where David Dubyne and Bob Kudla discuss a variety of events but mainly, the world’s food supply.

“And I heard a voice in the midst of the four beasts say, A measure of wheat for a penny, and three measures of barley for a penny; and see thou hurt not the oil and the wine.” Revelation 6:6

This site has presented in past updates sufficient data to show the nation’s food supply is being systematically dismantled via at least two avenues.

First:

Naturally occurring disasters are intensified (or outright created) by weather manipulation. 

Second:

The planting and harvesting infrastructure is being intentionally disrupted or dismantled by what this site has termed ‘the speck’.

By now, anyone accessing these posts should know what the (imaginary) speck is and it’s even discussed in the above links. The press (financial and mainstream) talk about the speck incessantly.

Put the lie out there long enough and eventually it will become belief.

Back to the markets and more specifically, CORN

CORN was a trade that was entered by the firm but then decided the look was not right and exited at essentially break-even.  That trade was entered right around the area that’s now labeled as a 38% retrace level.

The trade would have been modestly profitable but it’s not what we’re looking for. What we’re looking for may be yet to come.

The 38%, retrace level is now well established support and if penetrated by subsequent price action would generate a reversal condition known as a Wyckoff spring.

Shown on the chart as well, is the wide high-volume price bar that’s right in the middle of the 50%, retrace level.

This is where it gets interesting.  Markets behave in such a way as to come back to high volume areas for a test.

If somehow, CORN retraces to this level for a test of the wide bar, it will automatically set-up a spring (reversal) condition by penetrating price action at the 38% level.

Our edge in this situation, are the bullet items discussed above.  The entire world’s food supply is in jeopardy.  That’s a known fact.

Crops are failing world-wide.  Weather patterns are erratic and manipulated. 

Knowing this provides a fundamental backdrop that should CORN retrace to test the wide bar, it’s not likely to stay there long.

In addition, if CORN reaches the 50% area, it may never come back to those levels.

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.

Bond Reversal

November 12, 2020 By in Bonds, DIA, Dow 30, DXD, TLT

In the past three days, bonds (TLT) penetrated support and stopped dead.

Anytime a market penetrates support or resistance and halts, it’s an indication that something’s up.

Either the market‘s absorbing transactions at that level to continue on, or it’s a reversal about to happen.

With all that’s known on the short position by the speculators as well as another Van Metre report, bank lending standards, probabilities point toward bond reversal.

The dollar is already reversing higher.  Gold has been viciously slammed lower and the overall market’s hovering at all time highs.

The Dow edged lower at the last session. This session in the pre-market (9:01 a.m., EST) it’s lower again at -1.94 points or -0.66%.

If the Dow (DIA) gets below the 290- area, it’s below resistance and another move higher may be difficult indeed.

We’re short the sector via DXD (not advice, not a recommendation). A new daily low for DIA will allow our position’s stop to be moved to DXD 13.49.

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.

Mind The Gap

November 11, 2020 By in DIA, Dow 30, DXD

For the past past five years, the Dow 30 has filled every gap … except two.

The ‘election’ gap of 2016 and the ‘election’ gap of 2020.

Looking at the technical condition of the Dow, it’s at an extreme. 

Testing the underside of a trend break while at the same time in a reversal (Wyckoff up-thrust) condition.

A ‘reversal condition’ does not guarantee the market heads immediately lower.

It points out the probabilities that some type retrace may happen before a move higher.

In the current situation, a significant retrace would put the Dow well below resistance; adding to the bearish assessment.

Pulling out to the larger time-frame, the weekly chart puts the current pre-market moves (as of 8:51 a.m. EST), DIA up 0.51%, in perspective. 

The market may oscillate attempting to move higher.

At least three conditions are working against such a move: 

Underside trend line test

Up-thrust (reversal) condition

Lower gap area yet to be filled.

We’re short the Dow via DXD (not advice, not a recommendation) with hard stop, currently set at DXD: 13.13

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.