Biotech … The Case For Collapse

Down 90%, Before October ?

If all the “Ifs”, come true.

First off, biotech (SPBIO), may already be in a collapse.

Of all the major sectors, it’s leading the way lower; down -61%, from all-time highs, set in February of 2021.

With SPBIO, lower by that much, are there still downside opportunities?

Only you can be the final judge of that.

However, for my firm, I’m not waiting around to see what happens next; we’re already short (not advice, not a recommendation)

SPBIO, Summary

As we’ll show below, SPBIO’s maintaining price action in a downside channel, declining at approximately -97.8%, on an annualized basis.

If that channel is held for the next three months (a big if) and if there’s no ban on short sales (as happened last time in 2008), and if the vehicle itself (LABD) remains viable, we can look for a -90%, decline from all-time highs, by October at the latest.

Why -90% ?

We’re using our chief, cook, and oh so, ‘disruptive’ bottle-washer, Carvana (CVNA) as the example.

The last report on Carvana, highlighted the possibility that it’s ripe for implosion.

The very next session, that implosion started in earnest.

Currently trading at 26.53, CVNA is down -92.96%, from all-time highs.

So, -90% (or more), for biotech seems reasonable 🙂

Throwing in a couple of anecdotal comments from J.B., Dan, and Patera, and voila! ‘This sucker could go down.’

Moving on to the main topic.

Biotech SPBIO, Weekly

Here’s where we are with the un-marked chart.

We’re going to compress the chart and put in the channel lines. The lower horizontal line marks a decline of -90%, from all-time highs.

If price action maintains the right-side trend line, a 90% decline, targets right around October this year.

Summary

This analysis could be blown away, rendered invalid, at the very next session.

That’s the way of the markets.

As sated, current positioning is to be short the sector via LABD, with trade LABD-22-02 (not advice, not a recommendation).

As a result of today’s action thus far, we’ve got a hard stop for LABD, currently @ 55.73.

Even as this post is being created, SPBIO action continues to grind down; threatening to post a new weekly low.

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.

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

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