Monthly Archives: April 2024

Bad News For Biotech

April 5, 2024 By in $SPSIBI, Federal Reserve, Interest Rates, LABD, SPBIO, XBI 1 Comment

Good News, If You’re Short

Yesterday, biotech (XBI) had the chance to reverse off Wednesday’s lows, continue higher into an upside move, a Wyckoff spring.

It didn’t happen.

The move failed spectacularly.

The ‘Street’ pays attention to such failed moves. Thus far, unless there’s some kind of massive demand, biotech XBI, has penetrated and tested support, now resistance, and is moving lower.

Strategy First

Recall, the work was done (three weeks ago) indicating high probability of a long-term reversal in this sector.

Adding some entertainment with the Fed is, or the Fed isn’t (going to cut rates). How about the Fed never was. 🙂

Until proven otherwise, we’re in a high, and higher, interest rate environment.

Biotech XBI, 4-Hour

Moving closer-in on the chart, the 4-Hour.

As we can see, on March 21st, XBI had a change of character.

Price action was relatively ordered and well behaved but then became more volatile on the 21st; it all fell apart, declining sharply on April 2nd.

At the point where the ‘change’ is noted, it also looks like XBI, began to form its (current) trading channel.

P&F Projection

If XBI, continues its decline, where’s it going?

What’s a likely target?

There are several methods that can be used; Fibonacci projection, measured move, and P&F to name a few.

A basic P&F projection is shown below:

What’s shown is the maximum projection range (not advice, not a recommendation).

As this post is being created (11:52 a.m., EST), XBI continues to grind its way higher in what’s likely a move to test resistance in the 90.50 – 90.60, area.

For the breakdown to be negated, we would need to see a decisive upside penetration of the right-side channel line.

It’s close but so far, price action is within ‘normal’ correction boundaries.

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

Silver Top?

April 4, 2024 By in David Weis, Ed Seykota, Gold & Silver, Silver Collapse, SLV, Wyckoff, zsl 4 Comments

Know Your Market

There’s been something wrong with the precious metal’s, gold and silver, for years.

Gold and silver used to move essentially in tandem, over the long term; not anymore.

This link shows there’s a huge divergence in the correlation between the two metals. Gold has launched higher, while silver has lagged.

Right around June of 2020, the correlation began to break down. What else was going on (or being ‘rolled out’) around June of 2020?

Recall, silver’s primarily an industrial metal; affected much more (than gold) by manufacturing demand.

Strategy First

Shown by the market itself, direct correlation between silver and gold no longer applies (or has somehow changed into a new construct), silver’s not confirming the ‘inflation’ shtick, possibly influenced more by industrial demand.

Thus, we have the following.

Silver SLV, Weekly

Just listening to what the market’s telling us, it says, when SLV, reaches a top and inflection point (to reverse lower), it tends to print heavy upside volume bar(s).

Looking at the chart, price action’s all over the place. Wide bars, volume spikes, the gamut.

Markets like this are unstable and usually can’t mount a sustained move in either direction.

Typically, if there’s going to be a breakout (or breakdown), price action tends to get tight, or get itself into a ‘coil’.

Even so, we need to account for the market itself.

Having traded silver futures contracts during the last run up and meltdown from 2011 – 2014, the silver market is thin and likes to ‘spike’.

That (spike) behavior is confirmed by Ed Seykota in Market Wizards and David Wies in his (formerly) daily market updates.

We may be at the beginning of a set-up for a Wyckoff up-thrust (above resistance) and then reversal.

A possible measured move for SLV (to be covered in another update), puts the tracking ETF, right around 25.60, about 2-pts. from where we are now (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

Biotech Breakdown

April 2, 2024 By in $SPSIBI, Biotech, LABD, SPBIO, Wyckoff, XBI

Surprising Weakness

When a market’s not performing as expected, then obviously, something else is going on.

The last update on biotech XBI, was expecting a bounce higher to take out potential stops in the area noted.

It’s not happening,

Instead, shown below, each bounce has less energy and, in the pre-market, XBI is trading lower.

Strategy First

Recall, we’re in a potential long-term reversal (Wyckoff up-thrust); based on the action of the market itself, that analysis is proving to be correct.

Biotech XBI, Daily

After each bounce, price action goes on to post new lows.

For yesterday’s action (Monday), not only do we have a new daily low but a new weekly low as well.

At this point in the pre-market (9:10 a.m., EST) XBI, is trading lower at 92.50, or – 1.44%.

We’re right at support levels and pressuring those 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

The Thrust Is Gone … Nat-Gas

April 1, 2024 By in BOIL, Natural Gas, UNG 1 Comment

Before It Can Go Higher …

Before Nat-Gas can reverse and head higher, it has to first, stop going lower.

One of the ways a market tells us it’s ready for reversal, is to print what’s called ‘shortening of the thrust’.

Essentially, each net movement over time (whether up or down), becomes shorter.

We can see that in Nat-Gas proxy, UNG, below.

Natural Gas UNG, ETF, Daily

Nat-Gas began its current decline around early October last year. Note, how each successive thrust lower has become shorter in net distance.

The inference is, ‘a reversal may be at hand’ (not advice, not a recommendation).

Recall, the prior post on UNG, link here, indicated the potential for reversal:

“The chart shows UNG, has penetrated support and is just ‘hanging’ there, unsure of what to do next.

It’s at The Danger Point®, where the potential risk of going long is least (not advice, not a recommendation).”

To be precise, in the futures market early the next day, a new low was posted; that new low was reversed by the open, with UNG higher.

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