Daily Archives: February 7, 2018

Crash OF XIV Inverse Stock Split Coming Up?

XIV trader: ‘I’ve lost $4 million, 3 years of work and other people’s money’ – MarketWatch

I read the story above about the huge losses this XIV trader suffered. I’m sure he was not the only one as XIV crashed dramatically this week. This XIV ETN followed the bull market up as complacency dominated the stock market again. I don’t have any sympathy for those that think they are investing in double leveraged products, without thinking how much of a bull trap they were in, in the first place.

Smart money would already have been short, long before this topped out. This XIV crashed all the way down to $6.15 and I don’t think it’s finished by a long shot.  Since it is very close to that magic $5 price level, any inverse stock split is highly likely. Usually we would be looking at a 4:1 inverse split which would price this ETN at about $24.

A simple tight stop loss would have protected most of your gains. Investing for the long term means nothing if we can’t see a potential crash setup, where all gains can get wiped out. The real VIX spiked up just like this ETN spiked down. I’m sure there were tons of stop loss orders crammed under the peak, so it takes very little to roll over and trigger these sell orders.

Bitcoin Futures Rally Review

In the last day or so Bitcoin has surged which is not the start of a runaway bull market, but can be a simple inverted zigzag. This grinding bear market has not acted like some fantastic looking flat or zigzag. The moves would be far more violent than we are presently getting.

None of the declines have been sheer vertical drops typical of a C5 wave in a flat or zigzag. I have said in the past that, any asset class that starts from “Zero” can end at “Zero”.

The funny part about this is that the mainstream media is starting to talk like that!

Get Ready for Most Cryptocurrencies to Hit Zero, Goldman Says – Bloomberg

The total Cryptocurrencies numbers have actually dropped in the last few days from 1514 back down to 1506. This number may even decline some more if they keep shelving projects due to lack of interest, bankruptcies, or just too costly to implement.

The Bitcoin ratio is 6.32:1 which is and extreme reading, but who says that the Gold/Bitcoin ratio can’t hit 1:1.  One of the lowest readings I have is a ratio of 1.74:1, so any 2:1 ratio would not surprise me. Does this mean that Bitcoins can start into a super bullish phase? I doubt it,  as all Cryptocurrencies can flat line just like Tulips did.

US Dollar Intraday Rally Update.

The carnage in the stock market seems to have done little to the US dollar as it just kept right on its bullish path since early February.

The US dollar rally is a bearish rally, which could still fill a wave 4 rally a bit more, to match the wave two rally that this 4th wave is part of.

Everybody on the planet has to hate the US dollar before its bearish phase will come to an end. In the long run the US dollar decline could end at a wave 1 bottom in Minor degree after which another US dollar freefall trend should happen. It would be great if this US dollar rally were to finish later this week, but that is a best guess scenario at this time.

The commercial traders are net long the US dollar, but not by any extreme ratio, so they still have very little power behind them.c

Mini SP500 Rally Update

A very strong counter rally is now in force, but if the bigger bearish picture is in effect, then this rally will run out of steam, by the end of this week. This market crash should not be a surprise to any serious market watcher as it seems to happen at every major top in January.

Investors don’t care about buying low and selling high, so they will always get themselves into a bull trap and get wiped out in the process.  The constant brainwashing about staying in the markets for the long term didn’t help in 1929 nor in 2007. No trend lasts forever as all trends eventually come to an end, especially in the general stock markets.

Insiders left this market a long time ago, and there are no real important insider buying announcements that have come out recently.

In futures it’s worse where trends can change direction very violently, with no too little warning. Leverage which produces fear, is the main driver of prices in the futures markets.

The markets are still soaring as I post, so at worst this bullish run could extend into next week.

Mini DJIA Crash Or Correction?

The markets are still soaring as I post, but I expect this rally to run out of steam by late this week or early next week. Any market move that was this unexpected, certainly unnerves the weaker investor, especially when investors just finished stuffing their RRSPs in January.

They paid no attention to how over-bought the market was as they do this just about every January. Many are calling it a correction in a bull market, and if this is true, then the DJIA must eventually push much higher and go back to breaking new record highs.

The longer it takes to push to new record highs, the less confident investors become.  The backlash to the initial drop is still playing out, but we are getting close to a previous inverse dip so this can produce some stiff resistance. This could be a wave 2 rally in Minor degree, and would be part of an initial zigzag in Intermediate degree.

The VIX is already crashing from a peak of $50 and is fast approaching the $21 price level. There still may be more downside to go with the VIX, but if this bear market is not over, than the VIX,  should crank back up again.  Sooner or later the VIX should soar above $90 again, which was the end of the 2008 bear market.