Market Summary: 8/4/15
It’s possible that it could all let loose at once.
Long bonds (TLT) penetrated resistance yesterday and are now just below that level (a potential Wyckoff up-thrust). Lower bonds, higher yields = lower real estate.
Then, Real Estate (IYR) posts an outside‑down daily reversal. While not as good as a weekly reversal, it still indicates potential trouble.
The S&P (SPY) rally appears to be sagging. A move below the last significant low at 206.26, indicates the SPY would be sub-dividing lower, not higher. A move above 211.45, gives the SPY a bit more life.
The coal sector decline continues with CNX leading this round of the wipe-out. The entire sector is now down about 93% from the 2011, highs.
Just to make it interesting, a 98% decline would equate to a level of 10.1, in the DJUSCL. If the current rate of decline continues, that level will be reached by the end of the year … just in time for tax-loss selling ... hmmm.
Basic materials (chemicals) are holding below a key level that is identified at this link.
As far as is known and unlike the auto industry, there has never been a government bailout of a chemical company.
- This sector could be the one … that breaks down the fastest, goes farther and declines for longer than the other sectors (obviously excluding the already beaten down commodities).
As always, events and market situations are in constant flux.
However, it is fairly reasonable to say that with the current environment, the last place this trading entity wants to be is anywhere on the long side.
Follow-up on Russell 2000.
The high in the Russell 2000 that was identified with the analysis shown below (posted on 6/26/15), remains in place. The full extent of the subsequent decline is unknown.
The Russell 2000 Index (IWM, ETF) indicates a reversal.
The chart detail shows several independent (Fibonacci, Wyckoff, Classical) characteristics that lead to the conclusion that the index has reached a top.
This is the "danger point" where the risk (of positioning short) is at its lowest.
Market Summary: 7/25/15
The bounce in the Russian market was a spot-on call but short lived. That bounce turned out to be a rebound in what continues to be an on-going bear market.
With oil set for another leg down, we should expect that the energy weighted RSX will follow suit. It should be noted that at current prices, the yield on the RSX is at 3.76%. A decline back to the December '14 lows, puts that yield at approximately 4.57% provided that the dividends are maintained.
In the gold market, we now find out that instead of the Chinese being net-buyers in the market (and thus the reason for the years long gold bullish talk), that all-of-a-sudden, these same buyers might have to liquidate to pay for margin calls.
All the while, (and for years) the GLD chart said that lower prices were ahead.
The coal sector (DJUSCL) has posted a weekly reversal bar and thus may have completed its four-year, 93% decline.
There is really only one (U.S. based) survivor from the wipe-out: Entry and position details in Market Action.
Semiconductors are posting what looks to be erratic price action. However, if the SOXX moves higher from its current level, it may be getting into position for a dramatic decline. Again, reference Market Action for details.
Basic Materials have broken decisively lower. This may ultimately prove to be the downside leader for the next cycle. The sector never fully recovered from the 2007 – 2008 collapse. It barely made a new high of 0.57%, in September of 2014. After that high, it oscillated for ten months before rolling over.
Market Summary: 7/22/15
The semiconductors may be setting up for a fantastic move. Specific details on where and when to expect the set-up for entry is in Market-Action.
The RSX/RUSL pair are in a test of the spring set-up that took place earlier this month. This is a strategic position in the Russian market with potential for long-term viability. How the market deals with the test will indicate if we are at the right time and the right place for an extended move higher.
Looking at the coal sector, it is all but over: DJUSCL down nearly 93% top-to-bottom.
Market Summary: 7/20/15
Watching the semiconductors closely at this point:
The Nasdaq moves higher and yet the SOXX moves lower. We will see if this is a sign of significant weakness about to be fully revealed.
Going short the SOXX may turn out to be a trade that can be maximized to the down-side.
More on how to approach that action and maintain a tight, low-risk position will be presented (if and when the opportunity unfolds) in the Market-Action section.
Market Summary: 7/13/15
The RSX/RUSL pair confirmed their reversal from last week with a continued move higher. Trade action is to move the stops accordingly and maintain the position.
Westmoreland Coal (WLB) also confirmed the accumulation that took place in the last two minutes of trade on 7/10/15. It too moved higher on the session.
A position was opened in Peabody Energy (BTU). The trade was well in the green at the close.
The gold market continues to tease with feigned attempts to move higher. The GLD is still in a position where it could break out to the upside. In addition, the GDX had a reversal day today. However, the long term trend of price action remains to lower levels.
The trading action is to stand aside in the gold/silver market.
Additional details on all of the above in Market Action
Market Summary: 7/9/15
As expected, the RSX had a gap-higher open to start the session. It would have been nice to have a sustained follow-through to higher levels. However, the index spent the rest of the session ratcheting lower in what may be seen as a test of the spring set-up.
Volume contracted on the day when compared to the prior two sessions. This is indicative of spent downward thrust energy (for now).
As a result of the above test, we can now place a hard stop (for RUSL) at the bottom of the RSX for the prior session (RSX: 16.91).
The trading platform used for the Three Ten account will allow trade execution based on price action of a user defined stock or ETF.
Therefore, close-out of the RUSL position will take place if the RSX moves below the 16.91 level (until the stop is moved higher).
After standing on the sidelines for several days with WLB; Today looks to be a completed (or near complete) test of the capitulation observed two sessions ago.
Both of the RUSL and WLB trade entries are intended to be strategic with a tactical focus. If the Russian market is to begin a medium to long term move (higher), then yesterday may have been the day for the reversal.
Sentiment in the coal-energy sector could change quickly with either natural gas supply interruptions, unanticipated news events or a change of political administration (or even a hint of change).
In a bear market like what may be occurring with general indices, we should expect the "surprises" to be to the down-side along with the news events to match.
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The market leads the news and not the other way around: Down market precedes bad news.
With all the carnage and pending bankruptcies, it may not be apparent to the general trading/investing public that Westmoreland Coal is in the cat-bird seat: Buying up power plants and coal mines while the entire sector is at 10-year price lows or going extinct.
Additional details in Market Action
Market Summary: 7/8/15
The Russell 2000 (IWM) continues to hold the down trend line noted on an earlier update. Price movement has somewhat of a halting look (with incremental lows) and may ultimately attempt to test its upward trend line break from 6/29/15.
The Russian market remains at a critical juncture where the price action may proceed in either direction.
However, since this market has already "crashed", we may view the subsequent move from highs of this past May as testing action.
Currently the RSX has moved to an approximate 50% retrace of the December '14 low to the May '15 high.
Gold is potentially in a spring configuration with the GLD ETF having penetrated the 111.50 support area. If the precious metals market is to break out of its bearish configuration, this is the location to initiate a rally.
Significant and sustained demand may be needed to penetrate several down-trend lines for a bull run to be initiated. Thus far, all attempts at an upside breakout (since April of '13) have been successfully thwarted.
Additional details in Market Action
Market Summary: 7/6/15
The Russell 2000 (IWM) has made several contact points (see annotated chart in "Special Situations") that indicate it is adhering to a down trend line. The short position is being maintained.
The exit several sessions ago in WLB proved to be correct as price action appears to be indicating a continued capitulation. Still monitoring for evidence of sustained demand that would lead to a viable reversal.
Additional details in Market Action
Market Summary: 7/5/15
The Russell 2000 (IWM) has made a top, broken trend-lines, verified the break(s) and is now poised to move aggressively lower. In the process, it may establish a down trading channel.
Gold continues to press on with lower highs and in so doing continues to confuse (and stress) those who maintain a bullish stance.
An exit was made on WLB before it went on into what appears to be capitulation. Price action continues to be closely monitored for sustainable upward pressure.
Additional details in Market Action
Market Summary: 6/30/15
There are no guarantees in the market. Sustained (regular session) demand in WLB is still yet to arrive. Indeed there was a block trade prior for 89,000 shares. At the end of this session, there were two more blocks that totaled over 28,500 shares.
Interest and demand appears to be building. We are out on the sidelines for now until WLB begins sub-dividing higher (something it has attempted several times).
The Russell 2000 had a weak rally and tested the underside of a trend-line break. Additional details (including position and stop adjustments) are in Market Action
Market Summary: 6/29/15
The reversal in the Russell 2000 is confirmed with today's action. Price targets (for the down-side) are planned and will be placed in Market Action
The potential reason for the 89,000-plus share block trade in WLB became apparent with the Supreme Court decision on coal-fired emissions.
If the professionals are taking a position, it will show up on the tape.
With the overall market at a top and potentially setting up a full-blown (sustained) trend change, we see nascent evidence of sector rotation into of all things, coal-fired energy.
It may be important to note that it is Coal energy that is receiving the bid in the power sector and not Uranium.
Market Summary: 6/27/15
Westmoreland Coal (WLB) had a block trade posted at the end of the session for $1.92-million. Someone is buying. Additional details in Market Action
Behind Door No. 2, we find that the Russell 2000 index has reversed. In addition, the S&P 500 volatility has declined to pre-2008 crisis levels. We now have yet another potential reversal during or just prior to (or just after) a holiday week.
Other notable reversals that occurred prior to, during, or just after a holiday week:
Week of 5/23/08: S&P 500 makes a high on the Monday prior to Memorial Day: S&P then crashes over 53%.
Week of 7/3/14: Russell 2000 makes a high on the Tuesday of the July 4th week: Subsequent decline is 9%
Week of 9/5/14: Russell 2000 makes a high on the Wednesday after the Labor Day weekend: Subsequent decline is 12%
Week of 6/26/15: Russell 2000 makes a high on the Wednesday prior to the July 4th week: Subsequent decline is: Unknown