When The ‘Thrust’ Shortens

The balls clicking away on a Newton’s Cradle, will eventually come to rest; so, it is with markets and reversals.

Price action moving in one direction will eventually stop, then reverse.

The ‘how’ and ‘when’ of that action, is what we want to know.

Years ago, Wyckoff observed, reversals were likely when price action began to have a ‘shortening of the thrust’.

We can see that in the chart of inverse biotech fund LABD.

Biotech 3X Leveraged Inverse Fund LABD, Hourly

Friday’s action posted a new LABD low of 0.01-pts, corresponding to new XBI high, of 0.02-pts.

From a shorter thrust perspective, we’re looking for net downside progress, not overall distance.

Looking at the chart, it’s reasonable to expect biotech SPBIO, $SPSIBI, XBI to decline in the coming sessions with leveraged inverse fund LABD, rising accordingly (not advice, not a recommendation).

Positioning

Those monitoring this series on trading the sector, have been privy to the actions taken by one speculator to position (and re-position) short via LABD.

With the understanding, anything can happen, I have an open short via LABD, noted as LABD-23-14.

Hard Stop is last Friday’s low of LABD 17.61, with Soft Stop, discretionary, near LABD 18.00 – 18.09 (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