Here’s a quicky, and moving on from the CVI Investments, LLP fiasco.
First thing is the last thing I’ll say about CVI. I read comments and other posts about my last post. I think some people missed the point. Some seemed to get caught up in the whole alleged Gary and CVI relationship. Yeah, it’s fun to ponder with all the mystery and intrigue that gets your imaginations going, but that wasn’t what the post was all about. As far as that goes, I’m simply saying that if you crept up behind Gary as said, “CVI Investments”, he’d more likely respond with a “Hey!” than a “Huh?”. That’s all based on circumstantial evidence which isn’t enough proof to prove anything about a possible relationship.
So what was it about? Well, the point was that I think CVI has played out their short position. They are done with that, so now we can get back to typical market maker shenanigans.
I have learned a very valuable lesson over the last 418 days. Some of you already knew this, but it was new to me. There are two types of markets, a pure market and a manipulated market. This is all my own observations, it’s not something I was told or read in a book. A pure market is one where retail runs the roost. That is when technical analysis can be used with some success. In a manipulated market, technical analysis don’t mean shit!
In a pure market (That’s just what I call it) retail is in charge and all the human behaviors that go along with it. Technical analysis is more an analysis of those behaviors than anything economic. So, when those typical behaviors are allowed to run their course, it works like it its meant to.
In a manipulated market, human nature is being manipulated by something that has the resources to control it. Therefore, human behavior is unnatural and TA is pretty useless.
Bottom line, in a pure market human behaviors are driving the price. In a manipulated market, the price is being manipulated to drive human behaviors.
Back when I first started doing this, I was using TA. TA is simply statistics that say in certain setup you have a better than average chance of a particular outcome. That’s it! TA predicts nothing. Yes, it is a self-fulfilling prophecy. If everyone is looking at, and anticipating, the same thing, then that’s more likely to cause it to happen.
Back then I made 4 different predictions at various times based on what I was looking at. I had several things to support the analysis and each was solid. After the fourth one, I was just another asshole who was 0 for 4 with predictions! Statistically I should have been at least 2 for 4. That’s when I decided it was time to change my approach an went with the Wyckoff volume price analysis.
I talked about where I went wrong with Wyckoff in my last post, but for the most part, it was right. That’s because Wyckoff was all about following the manipulators in a manipulated market and that’s what we were in. Hence, TA = poo, Wyckoff = Yay!
Here is the daily with my BOP… “yeah you know me”. I haven’t mention the BOP in a while because there wasn’t saying anything worth mentioning. That gray area was where CVI really rained on my parade. You can see where it was at the top of the range and breaking out. The 20DMA was above the 50DMA and the price was above that. The price was breaking out of the downtrend and the trading range, what could possibly go wrong? CVI! That’s what went wrong. I think that’s where I made my strike out + 1.
My Wyckoff prediction, per the last post, is that CVI is done shorting. After that gray area its more a pure market where the sentiment was left in shambles by CVI. Then, retail shorts came swooping in like buzzards ripping up the road kill. You see those two areas where the BOP got really extreme? I would bet if you looked on StockTwits during those time frames, you would see an unusually high amount of posting by our retail short friends.
What is interesting about the second big bear push is that’s when I posted calling for a spring. The bears pushed and we went under major support. That should have been the nail in the coffin, but it wasn’t. That should have been our KO, but it wasn’t. In fact, lackluster earnings came out right after that and instead of completely imploding, we sprung the spring. I still think the spring is ongoing and all the resistance, I’ll mention in a minute, is what’s holding it up.
Even after the assault, look at the yellow arrow. According to the BOP, today was the first time since January the bulls took control of this thing. So, out of the 21,806 watchers on StockTwits, the 100 real people can go have a drink on me. You accomplished something today!
Maybe, just maybe, if we are in fact in a pure market, and CVI is done with their short, then some TA might start working again.
We are back in the trading range and crossed over both the 20DMA and 50DMA. The 20DMA in one penny from crossing over the 50DMA. From a MA standpoint, when the shorter MA crosses above the longer it indicates a change in trend. Perhaps with the BOP showing a shift in control, it may actually work this time. Though, I’m still a bit jaded and am not 100% convinced just yet.
I think what’s shown above is our most immediate problem, but it has solutions. I’ve mentioned on the boards that there is a ton of volume between $1.80 and $2.10. I highlighted it above in the volume profile. These guys just rode it down to the $1.40’s and aren’t happy about it. Who can blame them? Their initial thought is “Sweet Jesus just let me get back to even so I can end this nightmare”. Again, who can blame them?
That attitude is justified, but it’s going to create a lot of resistance in that area as a bunch of supply starts coming back into the market. The point of control (POC) is that red line in the middle of the highlighted area. It’s where the absolute most volume is, and it’s at $1.93. So, the closer we get to that, the harder it will be to get past the supply. I think that accounts for why the first spring on 5/11 failed right at $1.90. If we should find a way to push through, there will be a lot of rotation from weak hands to strong hands, and once through it, it should act as an area of strong support rather than the resistance it is now. There are a few ways to solve this problem:
- Our boy Troy delivers with some good news
- A big player comes in to accumulate and absorbs all the supply
- A big change in sentiment that encourages them to cancel their sell orders and hold for gains
- The technical improvement will light up on the TA guys’ alerts, which will send them our way bidding up the price. In return, all our retail short friends, mentioned earlier, will cover and squeeze. The combination of the two will be enough strength to push us over $2.10.
Bottom line, something needs to change their fear to greed. Any four of those solutions are doable. My bet is on number four, but who cares as long as it happens. Speaking of the technical guys, you can see by the yellow arrows that volume is expanding on this new buying spree, that’s a GREAT sign! Also, we just made a higher low, which hasn’t happened since the three wise men started following the North star to find Jesus. However, we have not made a higher high yet. It does look like a bullish wedge or ascending triangle, but you didn’t hear me say that. I’ll be dammed if this goes South and I end up 0 for 5.