Observing Market Action
CarMax, is posting a series of parallel trading channels with inflection points identified (so far) by a Fibonacci count (not advice, not a recommendation).
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The Danger Point®, trade mark: No. 6,505,279
Testing The Test
Yesterday’s update showed how Airbnb tested its wide, high-volume breakout with its own wide, high-volume downside.
That move culminated on September 23rd, which in turn, set up a test of those high-volume bars.
All of this action brings us to now.
The chart below, is a 2-Day Close of ABNB, going back to late 2021.
Airbnb ABNB, 2-Day Close
At the right side, we’re using Wyckoff terminology of ‘Up-Thrust’, ‘Sign of Supply’ and ‘Test’.
The up-thrust action penetrated long standing resistance at the far left. Then, reversed lower with what can be called ‘ease of movement’.
Now, we’ve come back up to test the up-thrust area.
Going Nowhere, Fast
It’s true that ABNB has oscillated in a wide range that’s over 100% from lows to highs.
However, there’s been no sustained long-term breakout to the upside.
With that said, ABNB has been posting (since 2020) sideways action.
In Wall St. parlance, a sideways market, is a bear market (not advice, not a recommendation).
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The Danger Point®, trade mark: No. 6,505,279
Wide, High-Volume Bar(s)
Nearly twenty years ago, David Weis said in his training video:
‘Wide, high-volume bars, tend to be tested’
Now, twenty years later, we see that exact thing happening with Airbnb.
On August 7th, this year, ABNB launched 17.43%, with twice normal volume after an earnings release; links here and here.
So, we have a ‘wide, high-volume bar’.
What’s most likely to happen next?
Airbnb ABNB, Daily
What’s most likely, is the wide bar gets tested.
If we know that wide bars tend to get tested, then trades can be planned accordingly (not advice, not a recommendation).
After the launch phase and during the reversal, ABNB was traded profitably to the downside: ABNB-26-06, and ABNB-26-07.
With that said, what happens next, or what’s likely to happen?
We’ll cover that, in tomorrow’s update.
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The Danger Point®, trade mark: No. 6,505,279
Once You See It.
Legend has it, Wyckoff locked himself in a room with nothing but a stock ticker and telephone; working many hours to decipher what the tape was telling him.
Later, the result of that effort was presented in his seminal text, Studies In Tape Reading, first published in 1910.
One of, if not the most important concept of that effort (also in his training materials) was, ‘What’s the market saying about itself?’
We’re going to use that idea to look at the biotech sector and specifically XBI.
Biotech XBI, Daily
There it is:
We have at least three significant thrusts lower; four if you count the one on August 28th, all of which suggest that XBI is in ‘distribution’ (not advice, not a recommendation).
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The Danger Point®, trade mark: No. 6,505,279
Meets the Definition
We just had a reminder days ago, from Linda Raschke, about the definition of a price action ‘trend’.
For a downtrend, it’s lower lows and lower highs.
When looking at biotech XBI, that’s what we have; a downtrend (not advice, not a recommendation).
Biotech XBI, Daily
At this point, we’re between ‘spring’ and ‘resistance’.
We see the Fibonacci sequence comes and goes; next up is ‘Day 55’.
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The Danger Point®, trade mark: No. 6,505,279
Reversal?
We have a Fibonacci sequence and a repeating pattern (not advice, not a recommendation).
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The Danger Point®, trade mark: No. 6,505,279
Reverse Trendline
The segment at left, shows the ‘reverse trendline’ technique in action.
The left side trendline was drawn first (days ago), then brought forward to the most recent high (at No. 1).
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The Danger Point®, trade mark: No. 6,505,279
From Resistance To Wedge … and Back?
The last update on Moderna, here, said that price action had slammed into resistance.
The chart shows that MRNA, has gone from resistance. to wedge, to measured move.
With the S&P and Qs, stalled at all-time highs, SOXX, DIA, XLF, IYR well off their highs with the biotech sector in an apparent reversal, one has to wonder what’s next (not advice, not a recommendation).
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The Danger Point®, trade mark: No. 6,505,279
What’s Next?
Last week, both Nvidia and Taiwan Semi, the two largest caps in the sector, reversed from their all-time highs.
The SOXX chart shows the effect of that action.
Now, we’re at a support level (dashed line).
‘Normal’ market behavior is to come back for a test (not advice, not a recommendation).
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The Danger Point®, trade mark: No. 6,505,279
Raschke, Weis and Wyckoff
The late David Weis once said he kept a copy of Wyckoff’s autobiography in his office, near him.
He made notes on it and marked it up so many times, the cover had fallen off.
His website (now deactivated) had a picture of him holding an original first edition Wyckoff ‘Studies In Tape Reading‘.
The last time I checked, that edition (if you could find one) in good condition, went for around $3,500.
All of this, ties-in with a recent interview of master trader, Linda Raschke, link here.
Wyckoff is specifically mentioned at time stamp: 10:52
In fact, just a few seconds later, we have a discussion on ‘springs’ and ‘up-thrusts’. 🙂
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The Danger Point®, trade mark: No. 6,505,279
