Amgen’s the largest cap in the biotech sector ETF, IBB.

Loss of momentum (magenta arrow) is clear.

Upside energy (weekly) MACD has been dissipating for over a year.

So, this is no transient direction change. Zooming into the daily chart shows hesitation at the trend line.

Then last Friday, a significant move away from that trend.

When there’s a trend break, typically there’ll be a test of that break.

In this case, such a test would cause price action to move higher; testing the underside of the trend.

Because there’s been so much congestion at the trend line, we may not get the upside move.

It may have already self-tested. From here, price action could just make its way down to the measured move target ~ 164 – 165.

Positioning:

We’re short this market via LABD (not advice, not a recommendation) and have moved the stop to 18.17, based on yesterday’s action.

Summary:

If AMGN decides to test the trend underside, it’s likely to stop out LABD.

If price continues to decline (unabated) to target levels, we’ll probably exit at pre-identified IBB, target ~ 138 – 140 (approx: 35 – 38, LABD).

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.