Biotech … Chess Game

2:00 p.m., EST

Force Everyone Out

Then, Go

With each adverse move (for the shorts), the case for biotech downside reversal builds.

You would think, with announcement of lawsuit field in Anaheim CA, stating 45,000 are confirmed dead (via ‘official’ sources) from injections, it would have caused a massive drop.

There was an initial gap-lower open for SPBIO with LABD, opening higher … but then what happened?

Price action went all the way down (for LABD) to the prior session low. That low was then penetraed by just 0.04-points.

That’s just enough to clear out tight stops, novices and short-term traders; all in one shot (no pun intended).

The fact LABD price action immediately rebounded from the lows, now trading higher, indicates possible trend line verification.

LABD (SPBIO) Analysis:

The LABD daily chart (above) has potential right-side trend verification happening now.

Price action cleared out the stops and hit the support/resistance boundary (dashed magenta line) simultaneously.

The weekly chart below, has one potential move:

Many “Ifs”

If we’re verifying the right side of a trend line and if that trend line is actually part of a channel and if LABD price action is pivoting to the upside, then we’ve got a potential trade (not advice, not a recommendation) that might culminate during the third week of October when markets typically bottom out.

So, we’ve got three “ifs”, one “then”, one “potential”, one “trade”, one “might” and one “typically”.

That sounds reasonable 🙂

On the plus side, there’s not yet been a serious upside move in SPBIO, that would negate the downside potential.

Fundamentals are coming out by the day if not the hour. Whether or not it’s all controlled opposition is unknown to us in the proletariat.

We’re not counting on legal action but price action itself.

That action continues to say that biotech is sub-dividing lower with LABD higher.

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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