The Moderna Reversal

‘Whistling Past The Graveyard’

Moderna (MRNA) appears likely to join the ranks of Carvana (CVNA), with a decline from all-time highs that’s well over -90%.

Even a ‘modest’ projection (as we’ll see below) puts the downside potential for MRNA, far below current levels.

Starting with the weekly chart, MRNA, has just barely retraced upward to an anemic 23.6%, before breaking to the downside.

Moderna MRNA, Weekly Chart

Zoom version below

The Wyckoff up-thrust (reversal), will be confirmed if/when MRNA pushes below last week’s low of 160.06

Projected Decline Over -90%

Unless it’s negated, the weak retrace (23.6%), tells us that MRNA, is probably just getting started to the downside.

Using a modest 1 : 1, projection from current levels, we have MRNA’s downside potential to the 45-area; representing a decline from all-time highs, of approximately -90.9%.

However, for such a weak equity (at this point), the decline also has the possibility to go a bit further, to a 1 : 1.382 projection (shown as the lower arrow).

Declining to the 27-area, would put MRNA, down a stiff -94.6%, from all-time highs.

If MRNA gets to those levels, that’s when the fun starts.

Class Action?

Recall, we’re using the Carvana Crash as the model, right?

Let’s hold that thought and go way back to October 17th, of last year. Reviewing the first bullet item of this post; some of which is repeated below, it said:

“Whenever a high-flyer darling stock changes course and reverses down in a big way, the lawsuits start.

‘Investors’ only know one direction … up.

They figure they’re so smart, any decision from them that does not work out, must be someone else’s fault.

Class Action for Moderna (with discovery) may be dead ahead.

Let’s start our stopwatch and see how long it takes for the first ‘Notice’.”

Getting back to Carvana (CVNA), it posted recent lows on July 14th this year. That was a decline (from all-time highs) of -95%.

Three weeks after that low, and just days ago on August 4th, we get ‘Notice of Class Action‘.

Tick, Tock …

Stay Tuned

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Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

The Danger Point®, trade mark: No. 6,505,279

The Big Move & The Big Money

Common Characteristics

Everyone talks a big game, wanting to trade like the next Jesse Livermore or James R. Keene.

To aspire and reach the performance level of the legendary, few know, it’s almost a requirement that several fortunes must be won and lost along the way.

That’s why Prechter said it years ago (paraphrasing), ‘It’s best to lose your first fortunes early; that way, you have time to recover.’

One very public and famous ‘recovery’ from a blown account, was Livermore’s trade during The Panic of 1907.

He was flat broke but sensed a big down move about to happen in the markets.

Legend has it, he pawned his car for $5,000; then, using that capital, shorted the market during the panic and profited over $1 million, covering shorts near the bottom.

That was then. Is there a now?

The short answer is yes. Huge moves (especially down) are still a potential.

Let’s take a look at how one opportunity presented itself.

Big Move Characteristics

There are at least three characteristics for a major move:

Price Extreme

Sentiment

Catalyst

To demonstrate how that criteria can be used, we’re going to use one very recent example:

The Carvana Crash

From the all-time CVNA, high of 376.83, set on August 10th, 2021, to the most recent lows (thus far) posted July 14th, this year, was a collapse over -94.8%.

Price Extreme

Carvana Has No P/E and maybe, never had one.

“If your biggest claim to fame is that you ‘invented’ a vending machine … you’ve got real problems.”

With that, and hovering at nearly $380/share, it’s reasonable to say CVNA, had reached an extreme.

Sentiment

To go along with the price and no earnings was the sentiment … literally off the charts.

Used cars, years old, selling above the original MSRP. It was a never-before-seen event.

From a trading standpoint, it does not matter the ‘reason’ for the sentiment; only that the extreme was there.

Catalyst

Now, the hard part. The ‘catalyst’.

Just what was it that pricked the bubble for CVNA?

For our example, it looks like it was one sub-par earnings release too many. At the time of release, there was a subtle change in the character of price action.

About one week after the earnings release in August 2021, CVNA, broke a long-term trendline and never looked back.

Summary

The above example has been highly simplified for brevity.

Even so, we can still use these criteria to look at other market conditions … other sectors.

As you may have guessed, one sector that meets at least two of the above conditions, is biotech, SPBIO.

The third (Catalyst) condition may have been met this past week on August 3rd, with this report. Another link is here.

The take-over candidate GBT, releases earnings on Monday (tomorrow).

Let’s see what happens next.

Stay Tuned

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Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

The Danger Point®, trade mark: No. 6,505,279

‘Pivot’, or ‘The Channel’

Who’s On First?

Evidently, according to this out on ZeroHedge, stocks will be a good buy when the Fed pivots; apparently getting back to 2%, inflation.

So many lies, half-truths and pre-suppositions, all in one sentence. Let us count the ways.

Actually, let’s not.

At this point in time, one does not want to draw any undue attention.

A better idea is to see what the market’s saying about itself. This is the crux of Wycoff analysis.

Wyckoff stated a century ago (1902, to be exact), stock prices moved based on an energy of their own; at times, completely disconnected from fundamentals.

Looking at those markets and from my own tracking spreadsheet, 106, indices or equities are currently monitored.

That list will change over time but it’s typically around 100 or more ticker-symbols.

Of that number, the following are those currently in a downward sloping trading channel.

The List

Looking at the charts on a weekly basis:

AEM, BBY, C, CAT, COF, CORN, CPER, CVX, DIA, DJ-20, DJUSBM, FCX, FMC, GDXJ, GLD, GM, HYG, IYR, PLD, SLV, TSM, USB, USO, WY, XLF, XOM, XOP

Others that may be about to confirm their channel:

IBB, MRNA, SPBIO, SPY

The Charts

Two examples are from the above list; the important part is we’re going to choose ‘heavy industry’.

Since nobody can seem to figure out the definition of ‘recession’, we’ll help them out a bit.

Caterpillar CAT, Weekly Chart:

The right trendline’s declining at approximately -67%, on an annualized basis.

Next up, FMC Corp.

FMC Corp., Weekly Chart:

FMC’s in a little better position with its right side declining at ‘only’ – 55%, annualized.

But wait, there’s more.

Since we’re on a roll; let’s throw in a bonus and include a market directly connected to the economy; Copper.

Bonus Chart:

United States Copper Fund, CPER, Weekly

Even with last week’s continued but fading S&P, short covering, CPER could not close higher.

Ruh-Roh.

CPER is heading south at a whopping -79%, annualized.

Ok, one more.

This one’s not quite yet confirmed but we’ll probably get a decision this coming week.

We saved the best (worst) for last

Moderna MRNA, Weekly

From the lows during the week ended June 17th, to last Friday’s high, was a Fibonacci 8-Weeks.

It’s also a near exact Fibonacci 23.6%, retrace.

On top of that, price action is testing the underside of resistance formed during the break below the 200-level at the beginning of the year.

If next week we see a pivot lower, MRNA’s potentially declining at a well-deserved, -84%, annualized.

Summary

We don’t have to listen to supposed experts and analysis ‘banter’. The charts themselves tell us the next probable direction, i.e., down

Who’s on First and What’s on Second.

The media?

Well, let’s just say they might find this link useful.

Stay Tuned

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Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

The Danger Point®, trade mark: No. 6,505,279

Biotech Tags The 200-Day

Now Comes The Dangerous Part

In what seemed to be never ending thrusts to the upside, biotech SPBIO, appears to have tagged the 200 Day, Moving Average, ready to pivot.

We’ll start first with the daily chart of tracking ticker $SPSIBI (SPBIO) to show the near contact with the 200 Day.

SPBIO, Daily

Next up is the 3X Inverse Leveraged fund, LABD.

It has printed record volumes (changing of hands), on weekly, daily, hourly, half-hourly and even a 15-minute basis.

Now, with today’s extreme move, we may be done.

SPBIO Leveraged Inverse LABD, Hourly

The chart is compressed to show the entire retrace move so, it’s a bit hard to see.

A zoom version is provided on the second chart

Zoom version

The markets in general and biotech specifically are in a precarious position.

The weekly chart of SPBIO ($SPSIBI) below shows the cross of the 50-Wk and 200-Wk MAs.

SPBIO Weekly

This is the only major index to be posting this characteristic (with GDXJ, very near).

It’s a short squeeze in a major downtrend.

Price action itself, says so.

Stay Tuned

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Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

The Danger Point®, trade mark: No. 6,505,279

Before The Open

Adverse Move, Biotech

Let’s get straight to it.

Has the biotech short failed?

Just after yesterday’s post inverse fund LABD bean to pull back from its trend line, an early warning.

With that in mind, let’s take a look at the index LABD is supposed to track and see what it says; SPBIO.

Since we’re using the hourly chart of LABD, we’ll do the same for SPBIO.

Biotech SPBIO, Hourly

What we have is a spring set-up that’s now in progress.

The resistance area (magenta line) is well defined. Price action contacted this area yesterday.

Now, the pre-market shows we’re going to open above this area. Inverse fund LABD is trading in the pre-market, down a stiff -1.75-pts.

Spring-to-Up-Thrust

Over and again, markets repeat behavior.

Once of those repeating patterns is what’s called spring-to-up-thrust.

If that’s where we are now (a big if), price action SPBIO, will not stay at elevated levels long.

Summary

If we’re in yet another shakeout, the expectation is for price action to retrace the opening gap higher within the first hour of trading.

How price action behaves if/when that happens will help determine if we’ve had a failure; SPBIO, heading much higher or one more shakeout before lower levels.

Stay Tuned

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Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

The Danger Point®, trade mark: No. 6,505,279

Biotech Short … Simple, Not Easy

Stop Runs & Tomfoolery

Sometimes you feel like an idiot and sometimes you don’t 🙂

Question: How do you know where the market’s going to go?

Answer: Put in your stop; that’s where it goes.

The stop level mentioned in yesterday’s update was not physically placed in the market but a mental identifier; indicating if the LABD trade was subject to failure.

As if on cue; no sooner was the stop posted than today, the market heads right for it.

In or Out

With the level being tagged so easily, it means that one’s thinking is right along with the amateurs, doing the same thing. Ouch.

So, price action penetrated the LABD 26.50, lows.

It’s what happened next that’s important.

It took less than one hour for LABD, to reverse off the lows and begin to print decisively higher.

Therefore, we just witnessed a run on the stops.

At the trader’s discretion, LABD-22-05, was maintained throughout the stop-run process.

The hourly chart of 3X Leveraged Inverse Fund LABD, provides detail; note LABD got itself back above an existing trend line.

SPBIO 3X Leveraged Inverse LABD, Hourly

Time is approximately 2:11 p.m., EST

Typically, a ‘bump-and-run’ move like this signals the kick-off for price action.

Summary

Biotech appears to have gyrated enough at the extremes to frustrate both the bulls and bears.

With today’s run, we may now be ready for a directional move; LABD to the upside.

Let’s see what happens next.

Stay Tuned

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Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

The Danger Point®, trade mark: No. 6,505,279

Biotech … ‘Changing of Hands’

From Weak (Longs), to Strong (Shorts)

Biotech has similar price action to gold (GLD), back when it changed hands (link here).

The 3X Leveraged Inverse Fund LABD, shows the detail.

SPBIO, 3X Leveraged Inverse LABD, Daily

The message of LABD, is straightforward if you know where and how to look.

We’ll start first, with the un-marked chart.

The record volume spike is obvious and noted below.

Immediately after the record volume, LABD shows a change of character; it’s reversed to the upside.

The next chart points out that LABD, just finished three consecutive up closes with heavy volume.

There have been higher single day up volume(s) but not ever three in a row at this (elevated) level.

The inference: This reversal is or has potential to be significant.

Summary

Starting on July 12th, and all through the reversal, a short position (LABD-22-05), has been and continues to be accumulated (not advice, not a recommendation).

There have been minor adjustments (small exits) throughout, but the core position has been maintained and increased as the market allowed.

As long as LABD, price action remains agreeable, stays calm, potentially ratcheting higher, the plan is to continue to increase the position until volatility or hitting the stop prevents further action.

Current stop is now located @ LABD 26.21 (not advice, not a recommendation).

Stay Tuned

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Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

The Danger Point®, trade mark: No. 6,505,279

‘Off The Cliff’

It’s Official

With a new daily low printed for biotech SPBIO, we’ve got confirmation of yesterday’s sell signal (not advice, not a recommendation).

To show that biotech is the weakest of them all, an updated chart (below) has the major indices ranked in order of downside action.

Prices as of 11:12 a.m., EST

Index Table

It’s a no-brainer (almost).

Even with the recent rebound, SPBIO remains the weakest.

From a Wyckoff standpoint, if one is going to short the market, his approach was to select the weakest sector(s) as they’re likely to fall farther, faster.

It’s the complete opposite of the amateur who spends his time trying to pick the top of the highest flyer.

We’re interested in opportunity; not bragging rights.

Let’s go straight to the 3X Leveraged Inverse Fund LABD, hourly basis.

SPBIO 3X Leveraged Inverse LABD, Hourly

Slowly but surely, LABD is competing the spring set-up and testing action.

If you’re not looking, it’s nearly imperceptible.

However, we’re still at the stage where the test can fail. We’re still at The Danger Point®

A reasonable soft-stop would be today’s low @ LABD 26.21, with a hard stop at yesterday’s low @ LABD 24.60

‘Soft-Stop’ meaning, if it’s hit, probabilities of trade failure have just increased significantly.

Summary

As can be seen on the side-bar, we’re short this sector with LABD-22-05, and TDA-LABD-22-02 (not advice, not a recommendation).

If price action continues to proceed as expected, the next update will show a repeating trendline that’s sure to catch one’s breath.

Stay Tuned

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Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

The Danger Point®, trade mark: No. 6,505,279

When It Heads South …

… Bad News, Comes Out

Is that where we are with Biotech?

Houston Methodist Sued, $25-million

In what may be just the beginning of similar actions, is this the pivot point?

Part of a lawsuit’s process is ‘discovery’. That’s probably the last thing any ‘institution’ wants.

ZeroHedge picked up the news, linked here; the comment section is telling.

Potential for a significant reversal in SPBIO, has been on the radar for about three-weeks.

What’s price action saying at this juncture?

SPBIO, Daily

For starters, within the first hour of today’s session, we’ve already had an ‘outside-down’ print; last session’s highs and lows have been exceeded by today’s action.

Shifting gears for the next chart, we’re looking at 3X Leveraged Inverse Fund LABD.

LABD, Hourly

The Wyckoff spring set-up is clear. The testing discussed in this update, is per-the-book for Wyckoff action.

‘Tests’ can always fail.

That’s why it’s called ‘The Danger Point’. It’s the location where the risk of being wrong is least (not advice, not a recommendation).

The next chart, also LABD, highlights the record volume on two time-frames, daily and hourly.

This is a potential ‘changing of hands’ from weak to strong for the short-side on SPBIO.

It should be noted, last week’s volume for LABD, was also a record, making it three time-frames.

Summary

As this post was being created, LABD continues to rachet lower into what is now a deep test.

Currently trading at LABD 25.98 (mid-session), we’ll see if the test holds and LABD finishes higher for the day.

Meanwhile, the fundamental backdrop and pressure continues to build.

Stay Tuned

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Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

The Danger Point®, trade mark: No. 6,505,279

Biotech, Test-In-Progress

By The Book

With about 40-minutes left in the session, biotech SPBIO, appears to be completing a test of its downside reversal.

Prior updates have shown the potential for a massive trading range; right along with a very weak reversal at Fibonacci 23.6%.

We’ve happened to locate a short video from the Wyckoff Stock Market Institute, detailing the nuances of Wyckoff spring action.

That video is linked here.

Watch the video and then look at the chart of leveraged inverse fund LABD, below.

SPBIO, 3X Leveraged Inverse LABD, Hourly Chart

If the test has competed, we can expect a swift LABD rally (spring) to the upside (down for SPBIO).

Summary

The potential for a significant down-move in SPBIO, has already been covered.

Reference updates linked here, here, and here.

If this is a move of major significance, we’re still in the very early stages.

Positions have already been established; LABD-22-05, TDA-LABD-22-02 (not advice, not a recommendation).

SPBIO itself, will define the next course of action.

Stay Tuned

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Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

The Danger Point®, trade mark: No. 6,505,279