Biotech Breakdown

August 24, 2020 By in Biotech, IBB, S&P 500 1 Comment

Biotech is breaking down, now.

For this firm, going short has been an on-again, off-again, back on-again affair.

Fotosearch_k16630038-borderThose with engineering degrees (including this author) or some other science degree, would have decided long ago, since the original entry’s not perfect (being stopped out), the idea must be wrong.

Others easily distracted (those with i-phones) would have given up as well … only to see their (short) premise come to fruition without them.

So, here we are.  Biotech (IBB) is breaking down with inverse BIS moving higher while the overall market continues to rise.  As of this post, the S&P 500, is up 25-points or about +0.75%.

The chart and the expanded insert, show trading activity over the past two weeks.

2020-08-24_10-04-52-BIS-Daily-5-bar-notes-insert-notesPrior to the ‘exit’ point shown, we’re positioned long BIS (short biotech).  Then, price action broke down through the prior day’s low.  BIS was exited entirely.

Almost immediately after the break, the down-side price bar was challenged with up-side action.

After that, next day saw even more upside.  When new daily highs were posted, BIS was re-entered.

Two days later, last Friday, the trade was increased by 7%.  Just topping it all off for what amounts to a full position.

Since we’re using trading techniques from early masters, the last two months or so, mimic actions that may have been taken by Livermore or Wyckoff.

Not saying we’re in the same league as them.  Just saying based on their writings, the approach mimics documented trading behavior in the markets of their time.

At this point and being fully positioned, we wait.  Livermore put it as:  “Get right, and sit tight”.

An obvious stop level is anything below today’s BIS low of:  33.01.

 

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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.

Silver Top?

August 21, 2020 By in Gold & Silver, SLV 1 Comment

The silver bulls may have been sufficiently trapped.  If so, they’re subject to a beating via reversal.

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The markets aren’t friendly and silver’s one of those that never takes prisoners.

As mentioned in an earlier post, even trading genius Ed Seykota (of Market Wizards fame), early in his career, was impaled mercilessly by silver spikes.

As always, anything can happen and some new demand come in to lift SLV higher.

However, when you look at the typical form of a silver topping pattern, it looks like we’re there.

If there’s a caveat, the chart pattern insert is on a weekly basis and the current chart is daily.

Markets are fractal.  Patterns can (and do) repeat at all time-frames.

Barring any additional upside, the expectation is for price action to retrace and test the wide, high volume chart areas.

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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.

Is Corn The Catalyst?

August 20, 2020 By in Banking, Bonds, Corn, Gold & Silver, S&P 500 2 Comments

Bonds, biotech, the banks; or is it corn that’s the catalyst?

Everyone’s focused on the markets, the S&P 500.

Fotosearch_k8956751Meanwhile, back at the farm (literally), the food supply is undergoing controlled demolition.

If the supply chain continues to be restricted with prices rising ever higher, the silver and gold ‘stackers’, may have to liquidate their hoard just to survive.

Getting back to corn; the technical position of the ETF, CORN was highlighted yesterday in this post.

Now, with about an hour before market close, CORN has posted a 38% retrace and reversal ( if close is at or above current levels).

On top of that, it may be too early but maybe not.  CORN is now trending upward at over 400%, annualized.

One day, does not a trend make.  Then again, wouldn’t it be nice to know early on of the possibility?

2020-08-20_13-42-53-CORN-Daily-4-bar-notes

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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.

Corn Flattened

August 19, 2020 By in Biotech, Corn, Derecho, Gold & Silver, SLV 12 Comments

Ten percent of the U.S corn crop was instantly wiped out last week during what’s described as an inland hurricane.

The video here goes into more detail about correlating events.

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To limit the food supply even further, driving prices higher under the guise of inflation, the ‘speck’ (time stamp 6:00) has invaded 100% of tested agriculture workers in California.

The corn ETF mentioned at Time Stamp, 4:16, in the linked video is shown below:  CORN is the ticker symbol.

The ‘derecho’ breakout is clear.  Currently, CORN price action has retraced slightly and is testing support levels.

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In separate markets, biotech (IBB) has posted another sell, sell-short signal with this session’s new daily low (not financial advice).

Silver is reversing as expected.

Whether or not this is just the beginning of a long down move to form new lows (for SLV), is unknown.  Of course, such a position or thought is, completely opposite the consensus view.

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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.

Shorting The Bond Market

August 17, 2020 By in 1987, Biotech, Bonds, Interest Rates, Lumber, Real Estate, S&P 500

Who goes first?  Do bonds break to the downside, rates up, market reverses lower into a potential crash; a-la October 1987?

Or, does the market (S&P 500) peak and reverse with a flight to safety (bonds) that mitigates or negates a sharp rise in rates.

Fotosearch_k6354877Maybe it’s stocks and bonds going lower together.  No safe havens.  Is it possible?

Early this session, the ten-year rate (inverse of bonds), is hovering just below the trend-line shown in the last post.

The bond bull market has lasted forty years.  Since 1980.  Obviously, at some point, it’s over.

With long bonds (10-yr, 20-yr) hovering near a breakout to lower levels, all it would take is some kind of ‘event’ to tip the scales.

Remember that Prechter  (no matter what you think of him) said years ago, the market leads the news … not the other way around.  It’s a complete mind-shift to understand that market position, price action, actually set the conditions for news events.

The market does not ‘react’ to the news, it ‘creates’ the news itself.  So, the bond market may be about to create an event.

With that in mind, inverse fund TBT attempts to give exposure to twice the downside of the 20-year bond.

In a nutshell, if the long bond moves lower, TBT moves higher at approximately twice the percentage amount.

The chart of TBT is below and it looks very similar to the $TNX chart in the prior update.  Looking closely, one can see the downward bias errors.  With each move lower in the $TNX, the TBT moves lower still.

It’s common with all inverse funds.

2020-08-17_9-07-32-TBT-Daily-3-bar-notesEffectively trading TBT requires a sustained down move in the corresponding market (to mitigate the down-bias).  The latest example shows bonds ready to break lower with rates ($TNX) moving higher.

TBT could be in a position for trade entry (not advice).

Additionally, if bonds break decisively lower, they have potential to stop dead what’s left of the economy:  Housing market, lumber market, building construction, and on.

Remember ‘the speck‘.  It’s all about the speck floating through the air.

On a separate topic and as a courtesy (not financial advice), the short position in biotech via BIS, was closed early this session as price action hit the pre-determined 8.15, stop.

Gain on the overall short position was about 5%.

 

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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.

Bonds Critical

August 16, 2020 By in Bonds, Interest Rates, Lumber, Real Estate, S&P 500 1 Comment

The 10-year bond has reversed.  Rates are moving higher.

Fotosearch_k0005935-borderIf the chart pattern (below) is in effect, if price action moves according to the breakout forecast, real estate … along with lumber prices, as well as the entire economy could experience a series of dramatic ‘air pockets’ all-the-way-down.

Of course, all of this is because of a little ‘speck’ floating around in the air.

Rates are at the wedge trend-line and instead of a breakout upward (as expected), could reverse back lower.  Anything can happen.  The next week is likely to be very interesting.

2020-08-16_8-43-46-TNX-Daily-3-bar-notes

 

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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.

September, 1929

August 15, 2020 By in 1929, 1987, Bonds, S&P 500

The stock market peaked on September 3rd, 1929, the Tuesday after the Labor Day weekend.

Labor Day for 2020, is Monday, September 7th

The bond market has posted a double top and reversed.  Rates are moving up.

Now, the stock market is stretched, extended and rates are rising; similar to August 1987.

Antique-Ticker-borderThe problem is, it’s similar by an order of magnitude or more.

Remember in the most recent downturn, there were trading halts, brokerage server blow-ups and customer accounts going completely off-line.

In that situation, if someone is long and expecting to beat the herd on the way out, good luck.

The firm sponsoring these updates and analysis stopped trading the (equity) long side of the market years ago; recognizing at any moment, the entire system could break-down with any open positions effectively locked.

If there’s another large break with orders, positions, accounts ‘trapped’, for hours or possibly days; who wants to be on the long side of the market?

Random Notes

August 12, 2020 By in Bonds, Gold & Silver, IBB, Interest Rates, Lumber, MRNA

Notes for the day … not in any particular order.

Lumber futures:   Prices up over 180% in five months.

2020-08-12_11-40-37-notesInterest rates are rising.  10-yr rates up.  Similar set-up as August, 1987?

Frustration with the mindless herd growing.

Biotech testing yesterday’s move lower.

Moderna (MRNA) has formed a wedge and is near a downside breakout.

Drunk and ‘working’ from home.

Internet censorship:  Oppenheimer Ranch Project no longer monetized.

Silver and gold, future test of new lows?  At time stamp 2:58, Sajad hints at same ‘testing the lows’ scenario as was posted with Silver Up, Then Down on July 25th.

 

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.

Downside Leader

August 11, 2020 By in Biotech, IBB, S&P 500, Uncategorized

Two months ago in this post, the idea was floated that biotech, IBB may be the downside leader.

It certainly didn’t look like it at the time.

Biotech even went on to make a new high … potentially negating the theory.

shutterstock_146355983It’s different now.

After that new high, IBB has reversed and is trending lower.

On the other hand, the overall market, S&P 500, continues its push upward.

It’s within 1% of all time highs.

Pre-market action as of this post, has the S&P opening up about 0.4%, higher … ever closer.

At this juncture, biotech has hinted at downside leadership.  That hint my become a solid fact if and when the S&P has a decisive downside reversal.

 

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.

Silver … Straight Up. Now What?

August 9, 2020 By in Gold & Silver, SLV 1 Comment

From bottom to top, silver has exploded over 147%, in less than three months.

In the process, a wide high volume trading range has been created.

So, what happens now?

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A likely answer is, go back to silver price action under similar conditions.

That behavior can be summed up as a ‘test’.  It’s the nature of the markets to test wide, high volume, (near vertical) price action.

Just what does test mean?

The financial pundits will typically call this type of action ‘consolidation’, but that’s a misnomer.

A test can pass or fail.  If the silver market retraces from here … or goes a little higher before a retrace, the nature of the retrace price action is important.

Using the SLV chart shown at the bottom of this post, we’ll be looking for how SLV behaves if and when it comes back to the resistance area … which may now be support.

The last update on silver hinted at a potential new low coming some time after the current run.  ‘Some time’, may be months or years.

Let’s step aside briefly and discuss market reality:

Completely contrary to what is espoused in the financial media, money is not ‘at work’ in the markets.  It’s ‘at risk’.

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Upon entering a position, any position, a tacit agreement has been made by the new entrant and the other participants.

That agreement is to voluntarily walk into what’s essentially the Roman Coliseum.

The longer you’re in the ring, the more chance you have of being gored, mauled, or eaten alive.

So, how does one minimize that risk? 

The answer is (from this firm’s perspective), wait for the set-up, no matter how long and then move quickly.

Here’s a prior update that’s a good example of how a trade opportunity was identified seven months in advance; then executed for a 155%, gain in just five days.

End of digression

As for silver, it looks like time to wait.  Bullish sentiment at this juncture may (if not already) have reached an extreme.  Price action typically reverses at high sentiment levels.

The SLV chart has two prior reversals identified.  Those reversal actions are similar but not exact.  If silver is to re-test the recent lows, we’ll be looking closely at how it behaves as it returns to potential support levels.

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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.