Breaking Down … Finally?

You have to wonder, is the curtain ever going to be pulled back on biotech?

If we use the empirical trading adage, ‘When price goes south, bad news comes out’, we may be getting close.

Biotech XBI, has gone sideways for months; oscillating in a trading range; that is, until now.

Biotech XBI, Daily

Two charts are presented. The first is a compressed view of the daily action, showing the trading channel.

The second is a closer look, with potential down-trending channel.

The two magenta lines correspond to the blue lines in the first chart.

Note how XBI, penetrated support and by definition, entered a Wyckoff ‘spring’ condition.

The market response was to initiate a rally but today, that rally appears to be failing (not advice, not a recommendation).

Positioning

First, some housekeeping.

Short trade on miners GDXJ, JDST-25-02, was closed at about break-even.

As of this post (11:48 a.m., EST) GDXJ, is just penetrating resistance at 51 to 51.5 … a potential up-thrust set-up.

Now, on to biotech

Short trade initiated in biotech via LABD, labeled as LABD-25-02, with stop at the LABD session low (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