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.
YouTube content creators have noticed the public’s inability, refusal, and denial to recognize (or accept) the truth:
Michael Bordenaro; ‘everybody’s so weak, so sensitive, they can’t handle the facts.’
Patera, Appalachia’s Homestead; discussing her lineage (Cherokee) and history, seeing the similarities of today, applying the lessons; some are more concerned about her hair and makeup.
Then, Uneducated Economist; ‘no amount of wishing is going to bring events back to the way it was. It’s effectively a new construct.’
Interest Rate Ruse
The 40-year bull market in bonds is over; rates are not going lower, they’re going higher (not advice, not a recommendation).
Ignoring or refusing to recognize this (highly probable) truth when analyzing markets, is a potential strategic error.
The longer the ruse goes on, the more violent the reaction may be when the masses (finally) ‘awake’.
All of which brings us to biotech, XBI, SPBIO, $SPSIBI.
Biotech Truth
Truth about biotech is brutal; described here, here and here.
Exactly how this will all hit the mainstream in force, is unknown. However, let’s not forget, ‘when price action goes south, bad news comes out’.
Biotech XBI, Daily
Heading south at this point, is biotech XBI.
Market test of the Wyckoff up-thrust (reversal) appears complete; previously discussed here, here and here.
As of 1:40 p.m., EST, XBI is trading back into congestion (92 – 96) and looks to have formed a trading channel.
Left channel contact line shown as No. 1, is supported by this post, potential long-term reversal.
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.
First off, biotech (SPBIO), may already be in a collapse.
Of all the major sectors, it’s leading the way lower; down -61%, from all-time highs, set in February of 2021.
With SPBIO, lower by that much, are there still downside opportunities?
Only you can be the final judge of that.
However, for my firm, I’m not waiting around to see what happens next; we’re already short (not advice, not a recommendation)
SPBIO, Summary
As we’ll show below, SPBIO’s maintaining price action in a downside channel, declining at approximately -97.8%, on an annualized basis.
If that channel is held for the next three months (a big if) and if there’s no ban on short sales (as happened last time in 2008), and if the vehicle itself (LABD) remains viable, we can look for a -90%, decline from all-time highs, by October at the latest.
Why -90% ?
We’re using our chief, cook, and oh so, ‘disruptive’ bottle-washer, Carvana (CVNA) as the example.
The last report on Carvana, highlighted the possibility that it’s ripe for implosion.
The very next session, that implosion started in earnest.
Currently trading at 26.53, CVNA is down -92.96%, from all-time highs.
So, -90% (or more), for biotech seems reasonable 🙂
Throwing in a couple of anecdotal comments from J.B., Dan, and Patera, and voila! ‘This sucker could go down.’
Moving on to the main topic.
Biotech SPBIO, Weekly
Here’s where we are with the un-marked chart.
We’re going to compress the chart and put in the channel lines. The lower horizontal line marks a decline of -90%, from all-time highs.
If price action maintains the right-side trend line, a 90% decline, targets right around October this year.
Summary
This analysis could be blown away, rendered invalid, at the very next session.
That’s the way of the markets.
As sated, current positioning is to be short the sector via LABD, with trade LABD-22-02 (not advice, not a recommendation).
As a result of today’s action thus far, we’ve got a hard stop for LABD, currently @ 55.73.
Even as this post is being created, SPBIO action continues to grind down; threatening to post a new weekly low.
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.
As we speak, economic activity is shutting down … fast.
Amazon shipments cancelled, gas stations going dry, banks halt lending, real estate sales collapse.
Meanwhile, the market’s in a short-squeeze.
What happens next?
We’ll discuss real estate and biotech farther down but first the data sources.
Dan from i-Allegedly reports here, he still has a couple of rubes (my word) that think the market just bottomed out.
Good luck with that.
As we’ll show below, the real estate bear market (IYR) rebound, was identified ahead of time.
Next, we have Red Hurricane describing one semi-trailer load after another being cancelled. He hauls for Amazon.
Shipping activity’s contracting, seemingly, by the minute.
Lastly, this link where the D-word, ‘Depression’ is used within the first one-minute, twenty seconds.
Bottom-out in the stock market? Probably not.
So, let’s take a look at real estate IYR, and see where it might go next.
Real Estate IYR, Weekly Chart
The last update (link, here) showed potential to rise into a test of resistance. That’s exactly what happened.
Back then:
And now:
With zoom
Obviously, the upward test happened much quicker than anticipated … but it was anticipated … no surprise.
Real estate got itself into Wyckoff spring position; so, a rebound (test) is normal market behavior … short-squeeze or not.
If it was a squeeze and if it’s over, we can expect an immediate drop in price action. We’ll analyze that as it plays-out in the coming week.
Now, on to biotech, SPBIO
Biotech SPBIO ($SPSIBI), Weekly
Some housekeeping first.
Obviously last week, with being short, more downside action was anticipated resulting in upside for LABD.
On Friday, that did not happen. Biotech was part of the squeeze as well.
The short position via LABD, identified as LABD-22-02, was reduced but not exited completely (not advice, not a recommendation).
At present this is where we are.
First, we’ll start by inverting the chart to mimic the action of 3X inverse, LABD.
Next, we’ll zoom-in and highlight the ‘squeeze’.
Doesn’t look like much when viewed that way does, it?
Next, we’re going to zoom-in, on the zoom
In spite of all the squeeze chaos on Friday, price action could not post a new weekly low (high on the non-inverted).
We’ll see this Tuesday, if that’s important or not.
This post is getting long but let’s end with the rule of alternation. The same chart is marked up below.
If this rule is still in-effect, we’re at a juncture where one can expect a ‘simple’ alternation.
We’ve already had complex action on the prior congestion; so, we can expect current action to be simple in character.
That means, price action’s not likely to stick around at these levels whether it’s going up or down.
Based on the above analysis, the expectation for Tuesday’s open is a gap lower for SPBIO and higher for LABD.
If that does not happen, something else is at work … we’ll report on that as necessary.
Summary
Has the market bottomed out? Not likely.
Those who are at this late stage, still arguing with Jerimiah Babe and Dan (and Patera), that the market’s rebounding, everything’s fine, are in a state of delusion.
The mindless herd following spending with ever newer cars, moving up to the McMansion, opulent vacations, posting it all on Facebook is most decidedly, gone.
It’s finished. It’s Done.
The problem is, as J.B. notes above (time stamp 7:15 and 8:30), those still living that life don’t seem to know it’s over.
For the leaders, the tiny minority and those reading this post, who are, or who have been preparing for years, it means potential huge (life changing) opportunities.
That is, as long as the markets, the banks and other infrastructure stay open; not guaranteed in any way.
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® 