Obvious Reversal: Biotech

1:53 p.m., EST

SPBIO, & IBB, Reversal

Over the past seven weeks, as the biotech indexes worked their way through a corrective retrace, there were no guarantees we’d get such an obvious reversal.

A market disconnect could have happened at any time (and is still a possibility).

At this juncture with SPBIO, penetrating and rejecting a prior resistance area, we’re likely on the way to much lower levels.

The daily SPBIO is below. The next chart has it inverted with notations added:

Inverted. Notations added:

We see penetration below the blue line support area. This sets up the Wyckoff spring condition (up-thrust, non-inverted).

The last update, showed thrust energy already divergent; set for reversal.

Note:

The criminal behavior within this sector continues to mount by the day.

Operating with impunity.

When, how, or if that breaks out into the open, is the big unknown.

SPBIO, Character Change:

One of the benefits (if you can call it that) of having a position that’s eroding by the day, is that you get very intimate with the behavior of price action.

Consider it an ‘opportunity’ to focus the mind.

The typical behavior of SPBIO (and inverse LABD), is to establish the day’s trading range within the first two hours of the session.

Consider those two hours as the ‘head fake’ as that range is then eroded throughout the rest of the day.

Today’s session has been no different. A wide range established early but here’s the change; There’s been little, to no erosion.

As if on cue, during the third hour of trade, SPBIO attempted to erode the range. Inverse LABD, shown below.

However, that attempt appears to have been rejected:

As of this post, price action can’t get itself (appreciably) back into the early morning’s range. The character of the index has changed.

Stay Tuned

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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