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 ‘Week 1’, and ‘Week 13’, designations show the time between pivot-points; Fibonacci 13-weeks.
‘Normal’ market behavior is to come back and test the underside of congestion from the May – June, reversal of 2022 (green dashed line).
However, we all know at this point, it’s anything but normal in the markets or anywhere else.
Positioning
The short position in the sector, LABD-23-11, is active and has been documented here.
As a result of price action, the stop on LABD-23-11, is being moved up (from LABD 21.65) to the Leveraged Inverse Fund’s low of October 24th, LABD 25.66 (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.
Well, pretty much everything is unraveling, so in a sense biotech’s no different.
However, this sector (SPBIO, $SPSIBI), is the weakest of all the major indices (from 2020 – 2022, highs), down approx. 62%.
We’ll get to the ‘history repeats’ part farther down but first a reminder, this site’s about Strategy, Tactics, and Focus, i.e., Livermore, Wyckoff, and Loeb.
It looks like we’re already in a full-blown economic, societal (population) collapse, i.e., Strategy.
Biotech appears to be the weakest sector, i.e., Tactics.
The (shorting) action is on that sector exclusively, i.e., Focus.
Not advice, not a recommendation.
Biotech Leveraged Inverse LABD, 8-Day
Since the Fibonacci 8-Day chart was used for the update on gold, GLD, we’ll use it for this post.
All trendlines shown on the chart are exactly parallel.
The market itself has presented a tendency to trend at the rate shown in the ‘Trading Channel’.
It’s happened before; identified as ‘Repeating Trendline’.
Positioning
This series of short trades on SPBIO, opened via LABD, and identified as LABD-23-10, LABD-23-11, are fully documented here, here, here, here, here, here, here, here and here.
From a Wyckoff perspective, the market itself is telling us to ‘do nothing’, maintain the trade unless stopped out (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.
First off, before we get started, there’s this on ZeroHedge; Gold price out of control?
The short answer is ‘probably not’ and we’ll use the confirmation proxy Silver (SLV), as our example (not advice, not a recommendation).
The Silver Non-Confirmation
In a traditional ‘inflation’ scenario, silver and gold typically move in tandem.
We can see that’s the case during the last (major) inflation event back in the late ’70s and early ’80s.
Gold spiked right along with silver; Gold chart link here. Silver chart link here.
That Was Then
What we have now, is different. Something’s wrong.
Silver’s not confirming the price rise of gold; Silver vs. Gold, link here.
There’s a massive divergence between the two.
Silver (SLV) Weekly Close
The SLV weekly, shows we’ve broken down from a wedge, now testing the underside of resistance.
Silver more than gold, is tied directly to the economy; over half of all silver is used in production.
It seems, production is about to fall off a cliff.
Evidence can be seen in a corollary indicator, layoffs.
Mass Layoffs
As Michael Cowan shows (time stamp 1:30), layoffs are accelerating.
Let’s not forget, ShadowStats shows its own unemployment indicator, already at Depression Era levels.
Positioning
On this site, beginning in mid-September, short positions (via LABD) were opened in possibly, the weakest sector, biotech, SPBIO, $SPSIBI (not advice, not a recommendation).
The initial position was stopped out (gain around +21%), then re-established the same day (LABD-23-11) with an LABD entry of 21.69.
So far, with today’s action, LABD’s trading around 23.90; approximately + 10% from the entry.
In addition, we now have a new Hard Stop @ LABD 21.65, yesterday’s low (not advice, not a recommendation)
Note: Posts on this site are for education purposes only. They provide one firm’s insight on the markets. Not investment advice. See additional disclaimer here.
Today’s price action is near the right-side channel line and downside energy (RSI) has a bullish divergence as shown.
What happens at the next session may result in maintaining the trade (LABD-23-11) or getting stopped out (not advice, not a recommendation).
Recall, the overall trend is down and the bullish set-up shown below, can sometimes get overpowered to the downside.
Biotech SPBIO ($SPSIBI), Daily
The short position via LABD, has a tentative stop in the vicinity of LABD 22.01, but this is not a hard stop (yet).
Hard Stop is still set @ LABD 20.54 (not advice, not a recommendation).
Next Session
The ideal situation for the LABD-23-11, short, is a higher open for LABD, and a higher daily high.
If price action performs otherwise, it’s possible I will take a discretionary exit on the position and go to the sidelines (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.
With this session’s price action continuing lower, getting back into the short trade (via LABD) was the correct move (not advice, not a recommendation).
With that said, we’re nearing the dangerous part.
Downside pressure continues to build.
As the chart shows, SPBIO ($SPSIBI) is close to the point where there’s no more support until much lower levels.
Biotech SPBIO ($SPSIBI), Daily
The Blue arrows highlight short entries (via LABD).
Short No. 1 was subsequently stopped out yesterday, then re-established (the same day) at the next arrow, No. 2.
If and when price action gets to the ‘free-fall’ area, anything can happen.
We could bounce off the support level, hover at it, or slice straight through.
Positioning
It’s obvious this sector’s in trouble. The fundamentals continue to build.
Just a few days after this post we have two more to add to ‘The List’, here and here.
Yesterday’s post showed a not-so-good entry that at this point in today’s session, has been ‘healed’ by price action.
We’re well above that (LABD 21.69) entry and solidly in the green (not advice, not a recommendation).
The stop on the LABD-23-11, position is now being moved (tentatively) higher at today’s low of, LABD 22.01.
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.
‘Once stopped out, the amateur will never re-enter the trade.’
That’s Dr. Alexander Elder, stating a typical psychological barrier for the new trader.
As if by design, as soon as the short trade LABD-23-10, was named, it was stopped out early this session.
About thirty minutes after the open, price action reversed its early session direction and re-confirmed the original bearish assessment of the sector.
Naming The Trade
From a personal standpoint, the psychological barrier of never getting back in a trade once stopped out, was addressed years ago.
It’s frustrating, but what’s worse, is watching one’s original premise turn into a ten-bagger and not being along for the ride.
With that said, the short in biotech has been re-established via LABD, at a far-from-perfect entry of 21.69, and a not-so good stop of 20.54 (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.
Hardly a day goes by where we don’t get some kind of biotech ‘conspiracy’ or exposé like this, this, this, or this.
True or not, from a trading standpoint, we’re interested in reality.
So far, that reality, i.e., the price action, says that out of all the major sectors (except bonds, perhaps), biotech, and specifically, SPBIO ($SPSIBI) is the weakest (not advice, not a recommendation).
The Trade With No Name
Since the existing short on biotech via LABD is solidly in the green (original entry @ 16.99), it’s going to be tracked on this site as LABD-23-10, indicating the tenth series (trade campaign) this year.
Biotech SPBIO, 3X Leveraged Inverse LABD, Daily
The first chart shows the original entry (documented here and here) and the stop progression.
The second chart shows that we’re in a trading channel, confirmed with today’s higher (daily) high, with SPBIO, lower.
During this session, the stop has been tightened up to LABD 20.74 (Friday’s low).
With that, it could all be over soon, i.e., getting stopped out; or, it’s just a continuing series of well-disciplined progressions protecting open profit (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.
It’s been a little nerve-wracking over the past two sessions being short biotech; was it an upward correction, or a full-blown reversal?
No one really knows, until it’s over.
Well, as of today’s new daily low in index SPBIO, it looks like what is now seen as a correction, may be complete (not advice, not a recommendation).
Bad, And More Bad
On the fundamental side, The List keeps building with links like this, this and this.
However, keep in mind, it may be something as simple as rising interest rates that’s ultimately going to collapse biotech and the rest of the markets (not advice, not a recommendation).
Moving on and looking at the chart of SPBIO, there’s a trend confirmation and potential trading channel.
Biotech SPBIO, Daily
The left side line is the trend … the right-side line is what’s called the ‘reverse trendline’ and possibly defines the trading channel.
As of this post (12:30 p.m., EST) the SPBIO, is doing all it can to reverse higher, against what may be the over-riding (down) trend.
So far, the daily high of SPBIO 5764.73, remains intact.
Positioning
As a result of today’s new SPBIO low, the stop has been moved on the position in the inverse fund LABD, from LABD 18.22, to LABD 19.18 (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.
Back in January, this post was contrary to the accepted (and still accepted) theory, there’ll be a Fed ‘pivot’ when the economy turns south.
‘Like ‘bread and circuses’, the ‘pivot’ discussion is a distraction … keeping the proletariat placated.’
We went south a long time ago and not only is there no pivot, rates are most likely going higher still (not advice, not a recommendation).
A Process Of Iteration
Those accessing this site for any length of time, have seen my trading actions going through a process of iteration in real-time.
Those actions have effectively searched (and profited) from moves, but more importantly, are looking for the market that stands to decline the farthest and fastest.
At this juncture, that market could be biotech and specifically, the SPBIO, index (not advice, not a recommendation).
Biotech SPBIO, Monthly
Depending on if, when, and where the neckline is broken, we have an approximate location for a measured move.
Head & Shoulders patterns, while being high probability, can be subject to failure.
One of the most famous of these in recent memory, was the S&P Head and Shoulders of late 2002.
It was an easily recognizable pattern that failed … only later to find out, the market had been manipulated higher by an entity (buying futures contracts) that had ‘unlimited capital’.
Positioning
As this post detailed, the main position going short the index (via LABD) has already been opened (not advice, not a recommendation).
There have been other additions, but they are nowhere near the size of the original entry.
Hard Stop has been moved up from LABD 17.59 to LABD 18.22 (not advice, not a recommendation).
Highly Leveraged, LABD
There’s no guarantee, 3X Leveraged Inverse fund LABD, will be maintained throughout a potential collapse. Events can change, even while this post is being created.
That being said, what’s happening here is akin to ‘settling in’ on a trade, monitoring price action, trend lines, and support/resistance, to mentally prepare for what could be a sustained 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 Danger Point® 