It’s literally been years of planning and waiting, for biotech to (finally) be exposed.
Going way back (over four years) in a cutting, but accurate post on the differences between followers and leaders, was this.
So, is now the time to short?
Is it already too late?
The chart itself will give clues to a possible answer.
Biotech XBI, Weekly
Those familiar with (typical) market action know, after it’s all said and done, there is a possibility the wide price bar will be tested (retraced by some amount).
At some point, the XBI is likely to find (temporary) support.
When it does, we’ll have some indication of retrace/testing potential (not advice, not a recommendation).
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.
Actually, it’s the A.I. bubble, that’s in trouble (not advice, not a recommendation).
To start things off, here are a few (A.I.) notes from the article at this link:
‘significant near-term headwinds’
‘diminishing returns’
‘hit a proverbial brick wall’
‘not lived up to expectations’
Need we go on? Why not. 🙂
‘increasingly challenging’
‘massive costs’
‘might be a pipedream’
Well, I think that sets the stage.
Before getting to the chart, let’s just add this one item.
While A.I. appears ready for a complete implosion, ‘investors’ have rarely been so optimistic, link here.
Of course, from a Wyckoff standpoint, the chart below, has already told us what’s likely to happen next.
Semiconductors SOXX, Weekly Close
Price action’s (potentially) in a massive terminating wedge, three-years in the making.
Note, the SOXX is at the trend-line for the fourth time.
An old Wall Street adage, the source of which was lost long ago said, ‘when the trendline is challenged for the fourth time, there’s typically a break’ (not advice, not recommendation).
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.
We’re getting very close to the SOXX, trend break discussed in this update.
If that’s the case and there’s a breakdown, the SOXX, joins the list of past manias and market bubbles (not advice, not a recommendation).
Other markets are hovering near all-time highs, giving the (false) impression, all is well.
Updated In Real-Time
Those monitoring this site have watched in real-time, how this market was selected for (short) positioning and when it was selected.
The only thing not discussed, was the management decision to maintain the position through the ‘election’ blip which at this time, has been fully retraced and more.
It’s a failed (up) move.
Nothing gets the Street’s attention more than a failed breakout or breakdown. The opposing side is trapped (not advice, not a recommendation).
Anything Can Happen
As David Weis used to say, ‘anything can happen’.
There has been no trend break, yet.
As of this post (10:50 a.m., EST), the SOXX, is hovering at support, threatening to break lower.
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.
One by one, each sector appears to be topping or reversing.
This time, it’s biotech.
Analysis (and action) over the past year has been on again, off again and now, appears to be back on again.
However, this time we have (as we’ll see below) a near perfect Fibonacci correlation.
Biotech Sector Index SPBIO, Daily
First, the big picture.
The corrective retrace that started way back in late October, of last year.
Next, we’ll get in closer to show the exactness of the Fibonacci levels.
It hardly ever works out this perfectly, but there it is.
Change Horses?
It’s no secret, the focus of trading action on this site since mid-October, has been to short semiconductors, potentially the largest bubble (A.I.) in world history (not advice, not a recommendation).
However, biotech may get its comeuppance as well with information like this, this and this hitting the mainstream.
The decision to take action or not, remains open (not advice, not a recommendation).
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.
For the vast majority, the answer is, ‘probably not’.
For the tiny fraction monitoring these updates, we should be getting the uneasy feeling, the (major) pivot downward in the SOXX, may have just started (not advice, not a recommendation).
Painstaking Detail
Over the past several months, presented on this site, the assessment that A.I., ‘artificial intelligence’, is just another mania in a long line of manias, going way back to the South Sea Bubble of the 1700s; reference posts or links here, here, and here.
The trick is, and has been, what to do?
One Man’s Approach
If I had to summarize my approach to the current situation, it would be to model Mr. Partridge (a.k.a. ‘Turkey’) from the book, Reminiscences of a Stock Operator.
That is, get into position, minimize transactions, stay there until the market says otherwise (not advice, not a recommendation).
That’s what’s being done; trade labeled: SOXS-24-20.
For additional reference, click on that number in the sidebar to see all related posts.
Election Reaction Complete
Based on SOXX, price action itself, it’s possible the upward blip from last Tuesday’s events has run its course.
If that’s true, we can get back to the (potential) implosion of the sector (not advice, not a recommendation).
As of this post (11:41 a.m., EST) the SOXX, has retraced nearly every bit of last week’s up-move.
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 real kicker though, is Dowd’s statement at time stamp 34:30 in the link; when the market finally does turn to the downside, ‘It will be quick’ (not advice, not a recommendation).
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.
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.
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.
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.
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® 