Before The Open

Adverse Move, Biotech

Let’s get straight to it.

Has the biotech short failed?

Just after yesterday’s post inverse fund LABD bean to pull back from its trend line, an early warning.

With that in mind, let’s take a look at the index LABD is supposed to track and see what it says; SPBIO.

Since we’re using the hourly chart of LABD, we’ll do the same for SPBIO.

Biotech SPBIO, Hourly

What we have is a spring set-up that’s now in progress.

The resistance area (magenta line) is well defined. Price action contacted this area yesterday.

Now, the pre-market shows we’re going to open above this area. Inverse fund LABD is trading in the pre-market, down a stiff -1.75-pts.

Spring-to-Up-Thrust

Over and again, markets repeat behavior.

Once of those repeating patterns is what’s called spring-to-up-thrust.

If that’s where we are now (a big if), price action SPBIO, will not stay at elevated levels long.

Summary

If we’re in yet another shakeout, the expectation is for price action to retrace the opening gap higher within the first hour of trading.

How price action behaves if/when that happens will help determine if we’ve had a failure; SPBIO, heading much higher or one more shakeout before lower levels.

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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