The ‘CPI’ Pivot

‘The Fed’s Work Isn’t Over’

With the CPI just released, the article at this link says, ‘the Fed’s work isn’t over.’

They’re so right; but it’s not the work they (at MarketWatch) think it is.

We should all know by now, the truth is right in our faces, but we have to be able to ‘see’.

What was seen yesterday, was that biotech appeared to be reaching an extreme.

As a result of the price action, a change was made in positioning out of (Basic Materials short) SMN and into a biotech short via LABD (not advice, not a recommendation).

Part of the reason to focus on LABD was the record volume as shown on the chart below.

Biotech 3X, Leveraged Inverse LABD, Daily

Note how the Force Index shows downward thrust energy is dissipating … even with the record down volume.

Next, we have the terminating wedge formation; indicating a potential reversal is at hand.

A wedge formation is a typical signal for an up-coming (potential) reversal.

It occurs at the tail-end of a sustained move; meaning a wedge is the last pattern to be formed. Sometimes there’s a throw-over (or under) and sometimes not.

Either way, it’s the end of the directional move.

After The Open

We’re just after the open; this is how it looks for LABD.

The first order of business is usually an attempt to close the gap.

As with the prior set-up in YANG, linked here, the objective is to allow LABD, close the gap as much as possible before adding to the existing position, LABD-22-05 (not advice, not a recommendation).

That may happen or not. This market’s already at a pivot extreme.

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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