Biotech Short, Revisited

So, the biotech short via LABD got stopped out last session.

Even though price action by its own behavior early in that session said to exit (at the highs), the position was maintained for the sake of argument.

The original stop was set at LABD 18.35, which was the 4-Hour low, noted yesterday.

Late in the session that stop was hit.

The overall sector (IBB) remains in a reversal with both daily and weekly MACD momentum indicators pointing lower.

In fact, Weekly MACD has a double bearish divergence in the histogram with MACD lines about to cross to the downside.

Putting all that together, expectation for inverse fund LABD is to head higher after yesterday’s counter-trend move.

Once stopped out (at LABD 18.33), LABD was re-established at a lower price (not advice, not a recommendation).

That entry price is on the weekly chart below:

We’ve switched to a weekly chart to show there are two other times in the past year, where LABD had three weekly up bars in a row.

Those reversals had narrow ranges and thus were quickly negated. This time it looks different.

The current bar is not complete but with the overall market (S& 500) at extremes and ratcheting lower, probabilities are high LABD will close higher for the week.

As for setting the stop on the new position, we’ll let the market decide.

Counter-trend action in the early session is usually over by 11:00 a.m. EST.

We’ll look at LABD at that time. Till then, hard (emergency) stop is located at the weekly LABD low of 15.96

Stay Tuned

Charts by StockCharts

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.

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