10:57 a.m., EST

SPBIO, Biotech Verifies Channel

Inverse LABD, Moving Higher

Biotech (IBB, MRNA, SPBIO): Analysis

Looking over the updates of the past few weeks, you can see how the LABD channel (above) was formed.

The trend has repeated with successive moves higher and the right side channel line moved as a result of price action.

At this point, we may be there.

If LABD closes the day at its current location or higher, it’s a good sign of channel confirmation.

In addition, we have Moderna (MRNA) in the process of penetrating the trendline shown in yesterday’s update. If price action continues lower (as it’s doing in the early session), it could be on track to post a weekly reversal.

Separately, the IBB (ETF) index is already posting a weekly reversal. From a momentum standpoint, the new weekly high of IBB, has put that index in a potential bearish (MACD) divergence provided it closes lower from here for the week.

Positioning:

The bearish case has been building even back to David Stockman’s assessment of ‘2-Trillion Dollars of Bottled Air’, during the summer of 2015.

However, Stockman does not trade. So, to figure out if ‘this is it’, is not in his repertoire.

With current events as they are, one can intuitively conclude the fundamentals have not improved for the sector.

The backdrop is there for significant downside.

With that in mind my firm remains positioned max short (not advice, not a recommendation).

Any selling in LABD that’s occurred over the past month or so, was to adjust account(s) for maintenance (margin) requirements.

Once the index was finished with its adverse (SPBIO, higher, LABD lower) moves, we’re right back to establishing a full position.

This type of action has been going on for months.

It’s tedious and not exciting; exactly the opposite of what a typical YouTube viewer is looking for.

As a corollary, there’s no artificial (and profit limiting) requirement to show ‘Monthly’, Quarterly’ or whatever gains, to retail customers.

The financial press takes care of the retail side.

Some (very few) actually escape; finding themselves on sites like Van Metre’s, Weis’, and this one.

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.