One Last Low, For LABD

Yet another low for inverse LABD.

Is this trade set-up still viable and/or worth the pursuit?

Short answer (at this point) is yes, and yes.

We’re going to look at the tape (the chart) and let it tell us what’s happening from a Wyckoff analysis perspective.

Since we’ve just past mid-session (12:37 p.m. EST), we’ll use the 4-Hour chart.

Biotech SPBIO, Leveraged Inverse LABD: 4-Hour

The unmarked chart above, looks like a mess.

Volatility everywhere in the past four sessions; including the Fed announcement on June 15th.

The marked-up chart below shows two distinct 4-Hour reversal bars.

Each of those bars were subsequently penetrated to the downside thus negating any entry signals.

However, it’s the next chart that draws from the secrets of Wyckoff analysis.

That is, “Shortening of the thrust”.

Discussed by David Weis in his training video, when thrusts become shorter, probabilities favor we’re nearing the end of the move.

As shown below, net downward thrusts on the chart have narrowed significantly.

Note that each downward thrust has successively less energy as shown on divergence of Force Index.

The next chart zooms-in.

Positioning

Based on the above, as much as price action gives the appearance of moving lower for LABD (higher for SPBIO), the energy to do so, appears to be spent.

Obviously, the accounts being managed have gone through a draw-down over the past trading sessions.

One account was stopped out @ 44.58 and then re-positioned at 44.01. The other account was allowed to draw down (not advice, not a recommendation).

The LABD-22-04, trade remains intact.

Summary

If the trend remains down for SPBIO, it’s highly unlikely the index will make new daily highs beyond this session.

If it does, then we can consider the trade set-up invalid.

A reasonable stop location at this point for inverse LABD, would be near or below the lows for the day (thus far), currently @ 42.37 (not advice, not a recommendation).

Stay Tuned

Charts by StockCharts

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