News Archive:  2016

12/29/16:

In The News

The links speak for themselves … however, in the Greg Hunter interview with Warren Pollock … he (Pollock) makes the statement the economy's so fragile, if Trump touches anything … anything, there’s risk of the whole caboodle coming down.

 

Any engineer or scientist knows that if something is left at rest, unattended, it eventually decays to dust.  Nobody needs to do anything at all to the economy. Something will break and It will implode of its own accord. 

Market Commentary:  8/11/16

 

When one looks just at the price action in the major sectors and the large cap stocks, it appears that individually they are coming to their own danger points one by one; areas on the chart that indicate the potential either for trend change or trend continuation.

 

As shown in the recent thedangerpoint.com posts, Blackrock and IBM reached potential pivot points within days of each other.

 

The S&P continues to labor on ... what will it take to move higher ... more stimulus?

7/12/16:

 

Simultaneous or near simultaneous events:

 

 

·        Long bonds have reversed back into a rising (terminating) wedge that took 4.5 years to develop

o       Rates are now moving higher

·        Attempt at pushing dollar lower (to negate ‘Brexit’) has failed

o       Dollar continues to press higher

·         Gold has reversed from an historic two‑time extreme

o       No one expects a major drop in gold

·         S&P breaking out to new highs

o       The narrative is that it’s 1995 all over again

o       Our assessment is that we are parallel with another time in market history

·        Deutsche Bank testing the underside of a downside breakout

o       Downside targets are for single digit (DB) prices … and then?

·         Real Estate (IYR) has just pushed to a new recovery high

o       What now? 

We completed our market position just yesterday.  It was a series of four separate entries and details are here.

 

As Greg Hunter indicates at time stamp: 22:44, things are likely to happen swiftly from here on out.

6/21/16:  At The Crossroads

So here we are, at the crossroads.

 

We have identified specific levels in the S&P that spell out two distinct and probable outcomes.

 

Penetration of one level to the up-side, gives weight to a breakout and new highs.

 

Penetration of the lower level, projects a downward move with an initial target … then lower, maybe much lower.

 

At the time of post (1:13 p.m. EST), the S&P is oscillating between these two levels.

 

Detailed chart of the S&P (SPY) at this link.

6/12/16:  Real Estate Wedge:  Price action in real estate (IYR) since the last weekly chart update, has served to clarify a potential trade opportunity.

 

A wedge pattern has formed over the past three months that gives us a measured move target.  Read more.

5/30/16, GLD:  Then and Now

As the media begins its scramble to “connect-the-dots” on the never ending and futile quest as to “why” the gold market is declining, the most probable path in that market was identified using Wyckoff analysis weeks ago. 

 

Not only that, the exact location of trend failure was presented as well (Note:  1).

 

If the chart of GLD had been given to David Weis on May 13, 2016, and asked for his analysis … I propose that he invariably would have identified May 6th as well, as the point of failure. After all, it was he who instructed me, to recognize such events.

 

He may also have said the wide price action area is likely to be tested.  That’s what markets do. 

 

Price action behavior has not changed for centuries.  Human behavior has not changed since the beginning of time.  

5/18/16, GLD Breaks Lower

GLD has broken the wedge pattern to the downside.  Typical market behavior at this juncture is to come back and test the break … however, it is not a given.

 

The market may or may not come back depending on the number of participants caught on the wrong side.  A greater number of wrong-way trades, tends to indicate price action will fall away and not retrace to test.

 

There is always the possibility of a shakeout and a move to higher levels.  However, the premise for continued down-side on gold was based on a dollar reversal.

 

That premise was discussed for several months (first postulated late-March) and it appears to be in-process … thus putting the kibosh on gold.

5/15/16, Gold, Ready To Reverse: 

A wedge pattern is a termination pattern … indicative of a pending reversal.

 

GLD is clearly in a position to reverse lower.  It may or may not.  However, if it does, GLD would then be in position to return to the wide price action area as noted.

 

Recall, that both gold and the dollar appear to be reversing simultaneously.

5/12/16, Deutsche Bank Down

 

Derivative exposure for DB is another off-the-chart number ... here.

 

DB may be getting ready for a significant break or a huge break ... depending on which wedge is in-effect.

Error Note:  DB chart is Weekly ... not Daily as labeled

5/10/16, Biotech, CELG:

Using CELG as the proxy for Biotech, we can see that it has been subdividing lower for nearly a year.

 

While the S&P continues to oscillate in a wide trading range, Biotech has stubbornly refused to co-operate (higher)

 

CELG is down over 26% from its 2015 highs and is currently testing the underside of resistance … potentially ready to resume the down trend.

5/4/16, 10:43 a.m. EST:  S&P Penetrates Support

The S&P is sagging below trend-line support as shown.  If the wedge pattern is in-effect, then a measured move can be expected to (obvious support at) the 198 area. 

5/3/16, 11:09 a.m. EST Gold Breakout Has Stalled:

At this juncture, the gold breakout has stalled.  This is the danger point where price action can go either way.

 

A move lower into the area shown, indicates a Wyckoff Up-Thrust and potential long-term reversal.

 

Market positions remain unchanged.

6/17/16:  After The Close

Is our trade premise for 2016, valid?  The updated chart gives subtle indications on what to expect in the coming week.

4/30/16, Gold Sector: Potential Short Squeeze 

It’s important to keep in mind that current market events are occurring on a massive scale.

 

The size and duration of the current S&P top, the size and duration of efforts to prevent a market meltdown … all at a scale unprecedented in market history. 

 

Those reading these updates most likely know that well enough.

 

However, just like the frog in the pot, when one is in it … such a large series of events, perspective can easily be lost.

 

The trading objective of this entity can be summed up in one word:  “Position”

 

We are actively working to get into a position that is in line with the more significant (and longer lasting) direction of the market.

 

In the case of the Biotech short, we think the objective has been achieved.  Biotech was identified (on this site) months ago as a lagging sector … weaker than all the rest.

 

The up-thrust in CELG was called “to-the-day”.  Then, IBB responded in kind.

 

Anything can happen and the short position in IBB may need to be exited.  However, if the current down move has sustainability, IBB may be headed lower … much lower.

 

Having correctly positioned in that sector, we are now “hands-off” and letting the trend take its course.

 

The same can be said with precious metals.  The chart of NEM (using it as the proxy) shows the current situation. 

 

What looks like a bull market is potentially just a massive short squeeze; having the same proportion as the other market events transpiring.

 

If so, the downdraft may be even more dramatic than the run-up that preceded it.

 

It therefore goes without saying, if-or-when bids evaporate, NEM (and GDX) may take all the “investors” down with the ship … to even lower depths and the final capitulation.

3/15/16, Before The Open:  Biotech Trading Channel

As Dr. Alexander Elder stated in his book, Come Into My Trading Room, the average investor will only make one attempt to establish a position.  If they are stopped out or exit by some other method, they do not come back.

 

The professional has passed that stage of taking a loss personally and will make several attempts to get into the position desired.  Read more.

3/10/16, 11:29 a.m. EST:  Biotech Update

3/10/16, 10:39 a.m. EST:  Critical Update

Tracking account position changes are here.

 

The S&P has reversed in the futures market and the SPY appears poised to penetrate the 198.21, low set on 3/8/16.

 

A penetration of that low, along with no new highs in the SPY, would indicate a high risk situation for the market.

3/9/16, Before The Open:  S&P Forms Wedge

During the overnight and pre-market session (8:49 a.m. EST), the S&P has formed a wedge, shown here. 

 

A wedge is typically the end, whether it's formed during up or down price action.  They can break either way.

3/8/16, Before The Open:  S&P Trading Channel

The updated chart of the S&P shows a potential trading channel (and extension).

 

If price action pulls back to the 199.03, level identified (previously), then it confirms the upper channel, setting up the potential for a downward move to the bottom channel line.

3/5/16, Weekend Update:  Market Status

The following table is a summary of the markets performance during the past week.  The corresponding ETFs for each market were used as the proxy.

  • 4.5%, Financials (XLF)
  • 4.39%, Russell 2000 (IWM)
  • 4.28%, Semiconductors (SOXX)
  • 4.01%, Real Estate (IYR)
  • 3.84%, Basic Materials (IYM)
  • 2.74%, S&P 500 (SPY)
  • 2.17% Nasdaq (QQQ)
  • 0.63%, Biotech (IBB)

It's obvious where we should focus.  During this sharp (potential short-covering) move, biotech has barely budged.

 

3/4/16, Before The Open:  Is This It?

A monster surge higher in the pre-market session of the S&P that is already fading, just minutes later.

 

Could we be in a massive trading channel as shown here?

3/3/16, Before The Open:  Biotech Bubble, Reversal Ready

While the S&P has been flailing about at its extremes, Biotech has not joined the party.

 

In fact, today may be the day where the index resumes its sharp downward trajectory.  Updated chart. 

3/2/16, Before The Open:  S&P Update

Once again, the S&P appears to be at a critical juncture.

 

Further (significant) upward progress from this point, is a low probability.  Updated chart.

3/2/16, Critical Update (12:11 p.m. EST):  S&P, The Top

Chart indications show exhaustion and a potential (sustainable) reversal.

 

POC (tracking) account positions consist of the following:

  • Inverse ETF
  • Put options with staggered expiration dates

Position detail at this link.

3/1/16, After The Close:  S&P Powers Higher

The S&P blew through resistance to complete what looks to be an, a-b-c corrective move.

 

In addition, it has met a Fibonacci time condition of 13-days from the 2/11/16, low.

 

Updated S&P chart is here.

2/29/16, After The Close:  S&P Breakout Failure

Today's action confirms the failure of the S&P to move higher. At the same time, it sets the index up for a move back to the prior lows.

 

That event, should it occur, is in line with "A move back to the low" in the following (Hussman) sequence (2/24/16, update):

  • Extreme over bullish, over valued
  • Market internals deteriorating
  • Credit spreads widening
  • Initial market loss of appox: 14%
  • Bounce off the intermediate low that fades
  • A move back to the low
  • Crash 

 Updated chart is here.

2/24/16, Session Update (10:33 a.m EST):  Position Changes 

The blog and Trading Spreadsheet contain position updates.

2/24/16, Trading Room:  S&P Chart Update

Discussion (password protected) on price action is here.

2/21/16, Weekend Update:  Gold Forecast 

Before we get into the projection for the gold market, first let’s dispel the myth that gold responds to inflation or hyper-inflation concerns.

 

Our view is the gold market has become so distorted, it no longer reflects long-held (belief of) inflation/deflation correlation.  Read more.

2/20/16, Weekend Update:  Testing The Gold

Updated GLD chart here.

2/6/16:  LNKD "Disconnect" May Offer Market Preview

The massive gap-lower in LNKD may be just a preview of overall (up-coming) market behavior.

 

This price action represents what may be possible on a total-market scale. There is no time to exit:  There will most likely not be a test of the underside resistance area around 170.

 

The action-item at this point is to monitor prices for continued follow-through.  Such moves would set the already deep hook in stunned bulls or investors and be an indicator of overall market potential.

2/5/16, Before the Open:  Stockman identifies S&P critical level as 1,870 

 

At time stamp 13:15, in this video link, David Stockman, former Budget Director for the Reagan administration, author of The Great Deformation, has identified 1,870 in the S&P as a critical level:  If breached, expect a “severe correction”.

 

That is a euphemistic term for ‘disconnect’ which in itself is a euphemistic term for a market crash.

 

In the interview, he confirms that current prices have no relation to actual values.  This analysis conclusion has also been presented by Peter Eliades.

 

Actual price discovery is what we will have once decisive penetration of 1,870 (and ultimately penetration of the 2009 lows) is accomplished.

 

As of this pre-market post, price action in the S&P is heading lower.  If momentum is maintained throughout the trading session, it will confirm the right side of a down channel we have been working to identify over the past week.

 

That channel line intersects the critical S&P 1,870 area this coming week.  Price action could reach that level today. 

 

In a ‘disconnect’ environment, expect the markets to eventually be closed several times and for several days at a time. 

 

Closures are likely as a result of 'market tape' outages (i.e. server failures).  There may be no reliable or trade-able bid/ask on the listed stocks. 

1/28/16, After-the-Close:  'Just about everybody'

Take a look at the first two paragraphs of the attached link.  'Just about everybody lost money in the first three weeks.'  Well, if you are part of the crowd, market losses are likely to follow.  Our own (non-crowd) tracking account is up 12.72% So, indeed just about everybody ... almost.

 

'Odds favor making it back in the weeks ahead.'  No statistics listed.  So potentially wrong again.  As reported at this link, odds favor a continuation of the decline by a factor of 70%.  Now, those are odds!

 

Three Ten was able to identify an historic Fibonacci contraction in the S&P: That contraction is why the S&P has moved lower.

The market ran out of time:  Literally.  

 

Fundamentals are essentially useless (the usage of which will result in loss) as affirmed by one of the best market traders of our era:  Ed Seykota

1/27/16, After-the-Close:  Bulls are trapped! (updated) 

Retail “investors” that bought last week at the lows, are now trapped.  What may be more important, is that the Commercials and Hedge Funds might also be trapped.  The overnight futures session (as of 11:55 p.m. EST) has attempted to move higher and failed (thus far).  

 

Attempting to exit with a large Commercial or Hedge Fund position in a market that could go “air-pocket” at any time, is a sticky wicket indeed.

 

Right about now is when they need Deus ex machina.

 

S&P 500 Chart update is here.

1/16/16

 

In his book Conquer the Crash and other writings, Robert Prechter states the next bear market will bring the so called financial advisory business to its knees:  His forecast is that during a vicious bear, these entities will be decimated and their clients with them.

 

The premise for his statement is they are all just part of the massive herd.  Anyone not part of this herd can be labeled a ‘contrarian’, ‘outsider’, or even better, ‘delusional’. 

 

That last one is my favorite as I received that label a while back.

 

By definition, to make money in the markets you can not be part of the herd.  Prechter again states that the number of people making any significant amount of gain in the market is “infinitesimally small”.

 

Why use him as a reference point?  Well, in 1984, he broke the trading championship record with a three month gain of 444%.  Three months!  Therefore, there is some validity to his statements.

 

This video link shows what it is like for the average investor.  The market is basically a NASCAR car crash every day:  Fog, smoke, pieces of decimated accounts flying everywhere.

 

The video also shows an experienced coach that has been-there, done-that.  He is in the ear of the champion, telling him what is ahead and that he can make it.

 

It is still up to the race car diver for sure.  Ultimately it is his (the driver’s) responsibility.  However, without his coach, he basically has no chance to succeed.

 

For those that are part of this entity, and for those who have gained access to the deeper areas of this site, you know that we have been in your ear:  Telling of the potential opportunities and risks ahead.

 

There are never, ever any guarantees in the market.

 

However, as the chart of the S&P shows, we have called it to-the-day for this round.  We have been “delusional” and “contrarian” in our market assessment.   To our knowledge, we have also been the only trading entity to make this call.  We have also been the only entity to identify the Fibonacci contraction of the S&P.  It was a very lonely place to be for sure ... the hard right edge.

 

Our accounts are now well positioned to allow the market to fluctuate (as it always does) and allow us to determine if this bear will continue on to the 2009 lows.

 

For those who may still be on the fence, we suggest that it’s time to get off.  Being at the effect (the losing end) of the markets is psychologically comfortable because nearly everyone else is doing it.  

 

Get out of your comfort zone and experience the raw edge of the professional realm.  There are no guarantees of success.  However, we believe that is much better than being stuck in a market car crash every day.

 

Respectfully,

 

Paul V. Mosgovoy