Danger Point … Print, Danger Point … Close

First, biotech SPBIO, ‘printed’ into the danger point.

The next day (yesterday), it ‘closed’ into the same region.

The charts below show where things left off at that close.

As is frequently done, farther down, we’re going to invert the chart to show price action similar to the leveraged inverse fund LABD.

Biotech SPBIO ($SPSIBI) Daily Close

Adding zoom for more detail

Next, we invert the same chart to show how it looks going short via LABD (not advice, not a recommendation).

Biotech SPBIO ($SPSIBI) Daily Close … Inverted

We can see that price action has been in a similar set-up before; just prior to a significant decline (non-inverted).

Summary

Obviously, Monday’s print into the danger point was taken as the set-up for a reversal. That reversal appeared to be taking hold based on that day’s price action.

Yesterday, reversed the reversal but then wound-up printing and closing into a danger point; an up-thrust condition on the standard chart and a spring condition when looking at it on the inverted scale.

Positioning

As was done in prior action, the position size in LABD, was reduced as price retreated (not advice, not a recommendation).

However, the position was not exited entirely.

Pre-market action has LABD, trading higher about 1-point or 2.0%. This behavior is consistent with a potential reversal.

Today’s close is the important part.

Higher for LABD, and we’re in a potential reversal for a significant move; lower and it’s time to exit completely and stand aside (not advice, not a recommendation).

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