The market is set to reverse.  The debt bomb fuse has been lit and bonds are already heading lower with rates rising.

This slow but persistent reversal was first covered here.  Now, the TLT is nearly 3% lower; a significant move for such a massive market.

As of this post, real estate (IYR) is attempting a breakout above resistance.

A failure here could be lethal as this market has been severely lagging the overall ‘recovery’.

Opportunities abound to generate profits and income; but it’s not on the long side.  Everybody’s a genius in a bull market.

It’s the bear market where fortunes are made … quickly.

The bank sector, XLF, is attempting to breakout above resistance.

A failure here, indicates a pivot to lower, possibly much lower levels.

This chart (6/2/20, update) shows the current situation.

The market has just opened and XLF is hovering near its recent highs.

An XLF move below the prior day’s low of 23.34, means a possible failure; the beginning of the next leg down.

As just reported here, there’s no recovery in sight.

It’s been seventeen days since the first post that biotech (IBB) was about to reverse.

Hysteria, hope and greed take time to bleed off.  It looks like today’s the day.

Unsuccessful attempts to move higher have exhausted the bulls.

The expectation is for a swing trade to lower levels. 

A close below IBB, 130.81 would provide extra weight to the down-swing potential

However, if “this is it”, the two-trillion dollars of bottled air (as David Stockman puts it) may be on its way out.

Technical, price action discussions on IBB and the inverse vehicles BIS, LABD, can be found at this link.

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.

No recovery in sight.  Pay cuts set the stage for sustained decline.

The markets however, appear to have their own agenda.  Like Clara Peller from the old Wendy’s commercial; Where’s the crash?

If we use 1929 as the model, then we’re either in one of two places.

The ’29 market had a sharp drop in May of that year before it went on to September all-time highs.

We could be there … with new all-time highs ahead.

Or, behind door number two; after the initial leg down in September – October of ‘29, the market recovered until late March of 1930, before rolling over.

Market behavior now, mimics the latter scenario.

The bond market continues its reversal.  Real estate’s a lagging market, having pushed higher and negating its previous reversal potential; at least for now.

Biotech seems to be in a world all its own.  The reversal identified here, continues.  Instead of an immediate move lower, we’ve got a topping process.

The 30-minute chart at this link shows attempts to move higher that are not (for now) successful.

If a new daily low is posted in today’s session (below 126.63), we may consider the topping process complete.

Commercial real estate has not joined the bailout party; it may be strictly political as described here.

If that’s the case, with political backlash a possibility, commercial real estate may be left to implode.

Highlighted four days ago here and here, was the probability of a counter trend move for real estate ETF, IYR.

That move appears to be over.  As of this post, IYR has just penetrated the prior day’s low (of 72.29), adding weight we may be in the next leg down.

Using standard tools such as Fibonacci, a projected move points all the way to ~35.50, for IYR.  At current levels, that represents a decline of 51%.

Yesterday’s action in the markets looked like a short squeeze; a sharp, near vertical move higher.

Only later can one be sure.  When the squeeze is over, prices collapse.

At this point we’re at a critical juncture.

A reversal could signal the beginning of the next leg down.

With that in mind, SPY is trading lower in the pre-market session.

Looking behind the curtain, we see how deep the rabbit hole goes.

Nearly a century ago, back 1921, Jesse Livermore said in an interview, the prime objective of the markets was “deception”.

Nothing has changed.

Price action is truth; all else is vanity.

Over the past several days, the market looks to have made its turn.

If we’re in that next leg lower, at some point the curtain will be pulled back to reveal what may be the largest financial wipe-out in history.

A reversal in Biotech was identified two days ago.  That reversal continues with the sector (IBB) opening gap lower.

While the rest of the market is well off its highs, the biotech sector (IBB) made a new all time high just yesterday.

The problem is, it’s a reversal.  Price action opened sharply higher and then closed lower on heavy volume.

It’s taken nearly five years for biotech to push past highs of July 2015; Not a roaring bull market

As the current medical delusion fades into some other delusion, focus on biotech may fade as well; Look-out-below when insanity returns to reality

Could it be at this juncture, going short the biotech sector is the least risk trade?

While all eyes are focused on the “V” recovery, the bond market is in a stealth reversal; interest rates moving higher.

Everyone’s expecting negative rates.  What if that does not happen?

Today (Tuesday, May 12^th) could be the day where the long bond (TLT) makes a new daily low; confirmation we may be in a dangerous reversal to higher rates.

For those who can remember the fall of 1987, the market was extended;  bonds had already pivoted to the downside.