‘Shakedown’ In Biotech

Don’t Think It’s A Racket ?

Well, here’s your proof.

It looked like biotech inverse fund LABD was going through a standard ‘test’ and then secondary ‘test’ (not as common).

Price action lulled participants to sleep; including this author.

Then , the shakedown.

The purpose is obvious; scare (nearly) everybody half-to-death and have them close out their positions.

It seemed to be working.

Early on, it looked like LABD was going to crater … with SPBIO launching higher accordingly.

Then, a funny thing happened.

LABD Block Trades:

As LABD price action was reaching its session lows, huge amounts of volume started to print on the tape.

Price action was not going down further and yet ‘block trades’ started to show up.

Strictly speaking, a block trade is anything over 10,000 shares.

However, I’m lumping in the 5,000 share trades and up, into the ‘block’.

There were plenty of those including one (buy) block for 13,000 @ 21.66; that’s equivalent to $281,580.

Stand Fast:

It’s days like today, understanding where one is in the market, is critical.

The initial work had been done long ago; that biotech (SPBIO) had printed three down quarters in a row.

The main long-term trend is down until price action says it’s not (not advice, not a recommendation).

LABD Analysis:

The un-marked daily of LABD is below:

Next, we move closer in and mark-up the 30-minute chart:

The large spike in volume is clear.

Volume in that bar’s 30-minutes was the highest since October 1st which was during a huge upward spike in LABD.

Positioning:

If LABD comes back down to the lows, it would indicate weakness and potential exit (not advice, not a recommendation).

At this juncture, the short biotech (SPBIO) via LABD, is being maintained (not advice, not a recommendation).

Last Thing:

Because LABD, price action has hit the 21.40 area three times and rebounded, … it could, … could head lower for a penetration and spring set-up.

Everybody and their dog (that’s left) has now put their stops at that level.

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.

The Danger Point®, trade mark: No. 6,505,279

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