Decision Point: Biotech

To Bounce, Or Not

Final stages of the bear market?

That’s what the ‘analyst’ at this link has to say.

If you know your market history, ‘opinions’ like that were pushed out all the way down to the bottom after the crash of 1929.

As for me, I’m going with the 78-year-old money manager that was quoted saying (paraphrasing):

‘It’s the biggest bear market of my life.’

Back to the analyst above, another opinion could be (looking at price action), we’re not in the ‘final stages’ of anything … except maybe the beginning.

Before we leave the topic, IYR real estate closed at 103.84, when the ‘old-timer’ spoke. Yesterday’s close was 81.43, down -22%, from that level and down – 30.3%, from all-time highs … and counting.

The ‘final stages’ of this decline is (potentially) years, if not decades away.

Biotech Decision Point

With about twenty-minutes before the open, biotech SPBIO, is set higher with leveraged inverse (pre-market) LABD, down approximately – 1.6-pts. (-6.3%).

We’re at a decision point for the sector.

Looking at the chart of inverse LABD below, a trend (and potential trading channel) is clear.

This morning’s gap-lower open is set to test that trend.

SPBIO, Leveraged Inverse LABD, Daily

If biotech remains in its downtrend that started at the August 11th, high of 7,399.86, expectations are for some kind of upside LABD, reversal within the first hour of trade.

If not, price action then opens the door for a move above established resistance at SPBIO, between 7,400 and 7,700.

As unbelievable as that would be, it could still happen.

Summary

The first hour of trade will be watched closely.

Price action itself will define if SPBIO, has fished its down move or if we’re just confirming the trend already established.

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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