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Keep in mind, the likelyhood of a margin selling induced
downdraft in to the close by those holding the ARKK like names is
Fib fan and channel support in confluence with price
Watch ARKK. So far, yesterday’s wonder reversal was
nothing more than a successful test of broken support at the old
march lows at 106.25, which converts that to new resistance. This
morning’s gap down if not reversed quickly will further
confirm that resistance. Alternatively, if the gap gets reversed it
will bouey the market and leave tech hanging on with a boatload of
new resistance sitting overhead.
The statement that the market is broadening in strength has no
basis in fact. The numbers do not lie, it is narrowing. What it is
doing however is rotating into late cycle names. More relevant to
ARKK, the relative strength of technology has made a major top that
is very strongly statistical correlated to very long periods of
relative underperfomance (decade +). In fact, it is virtually
identical to the peak of relative performance that occurred in
early 2000 and led to tech never surpassing those levels for 15
years and only after draw downs exceeding well of 50% in most tech
ETFs like ARKK.
Remember, most investors thought it was “different this
time” in 2000 as well.
If you found yourself perplexed this morning while all the momo
tech names gapped down so hard only to immediately reverse as if
some downside target had been achieved then consider the fact that
everyone of these momo ETFs...from ARKK to Chinese Internet to
Green Energy... gapped directly to their fib fans lines and once
that target was fulfilled that was it for the low.
RP...watch silver for a tell. The technical position is much
clearer there. It is sitting against the top of what would look
like a typical one year trend channel to most people. However, in
reality is a Fib Fan Line from the ATH back in 11. The fan lines
have defined its moves and ranges since the low last year. A
confirmed break above this line will trigger the start of the next
ARKK’s holdings have been in bear in a market since
@Feb 16th as has most of the related tech names. That is an
undeniable fact. There is no question it will end at some point,
and bounce along the way, but that doesnt change the fact that
buying into a bearish market on fundamentals is a very dangerous
strategy that has led to the demise of legions of people who became
complacent using that approach after long bull markets rolled over
as everyone has.
IWM gapped below then perfectly backtested its primary uptrend
line (green) confirming its significance.
Spx bouncing off its channel line.
That is exactly the kind of thinking that destroys people in a
bear market. Theoretical fundamental values are not part of the
equation in forced liquidations. A large reason reason for that is
the fact that forced liquidations cause a negative wealth effect
and further erosion in the theoretical fundamental values while
also irreparably destroying the supply/demand equation in the
security for a minimum of the short and intermediate term time
I should note, Martin Pring’s work suggests a significant
reversal in the relative strength of tech verse oil and gas,
similar to what occurred in 2000 and corresponding with tech
failing to exceed its prior highs for over a decade.
I spent much of the day explaining to people that the action in
things like ARKK, PBW, KWEB, etc, etc is exactly what occured in
the internet names in spring 2000. Stealth bear markets in growth
are not something to turn a blind eye to once rolling tops begin.
With charts like AAPL having what is likely a year long
distribution pattern in place this is not bullish action
That information is quite misleading. It presumes you sold
before May and had no exposure all month, which is not what the
axiom states. Instead it is sell IN May. Most programs that attempt
to profit from that strategy use a momentum based technical
indicator to exit at some point after May 1st (possibly even after
May) once a sell signal is triggered.
Anyone trading GDX should keep an eye on the declining purple
For the time being, yesterday’s retracement in the dollar
appears to be a successful retest of last week’s breakout
above its falling trendline and its uptrend channel.
GLD falling back into into its declining channel as
SLV rejected hard off the top of its declining channel
Today’s move in silver puts it right against the top of
Update of this mornings chart with todays move.
As some here might remember, I was very bullish when GLD
appeared to be breaking down in March and I stated that the move
was nothing more than the completion of a move to downside fib
targets and I pointed out that it was occuring in conjunction with
a big fib turn window (time and price squaring out). That was in
fact the ultimate low to date, but was tested through a double
bottom. At the time of the second bottom I reiterated my
bullishness based in large part on what I pointed out as an
expected top in the USD as it had rallied to an upside projection,
which was also the backside of a multiyear trend line.
Now, after a good rally in GLD, and straight line selloff in
the dollar, that dynamic has completely unwound and strongly favors
the USD rallying and a much tougher time ahead for GLD.
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