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 good news for the bears and the shorts; this morning’s action was probably the final push higher for biotech SPBIO.
The bad news; if that’s the case (a reversal) and the right-side trend-line has been verified, it could be the very beginning stages of a massive collapse.
It’s about midway through the day’s session. The leveraged inverse fund LABD, is printing a repeating characteristic that identifies a reversal.
Biotech SPBIO 3X Leveraged Inverse LABD, Hourly
This is how it looks around 12:50 p.m., EST with no mark-up.
Next, we’re going to zoom in on two areas of interest. A previous reversal and the apparent reversal in progress.
The price action is near identical.
First a false reversal that’s followed by the real one. That’s where we are now with today’s action.
Summary
A follow-up post using the weekly time frame is due out before the session open tomorrow.
All short positions remain active (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.
Summarizing trading actions for the week and the action plan, going forward.
Open Positions:
Currently there are two open positions: details below.
TDA-YANG-22-01
Short the Chinese FXI via YANG (not advice, not a recommendation)
Enter YANG @ 10.95, with current stop @ 10.89
Friday’s close @ 14.05, Open profit = 28.3%
FXI, 3X Leveraged Inverse, YANG, Daily
Shown above, YANG appears to be in a trading channel (grey lines).
As a result of moving decisively higher (FXI, lower), the stop on the position is to be moved to YANG 12.79 (not advice, not a recommendation) at the next trading session.
LABD-22-05
Short the biotech SPBIO via LABD (not advice, not a recommendation)
Multi-entry LABD @ 28.11 (combined), with current stop @ 26.57
Friday’s close @ 26.98, Open loss = – 4.02%
SPBIO, 3X Leveraged Inverse, LABD, Daily
Last week contained both record daily volume (since inception) for LABD, as well as record weekly volume.
Downward thrust energy has dissipated. The down-move appears to be exhausted.
Supporting the assessment LABD is at or near a pivot point (reverse higher), we’re going to review the 3-Day chart.
SPBIO, 3X Leveraged Inverse LABD, 3-Day
Note, there is one more trading session (this Monday) needed to complete the current ‘3-Day’ bar.
First, we can see downward thrust dissipating as on the daily chart.
The prior three-day bar is identified as ‘Ease of Movement’.
It’s the first bar in the entire down-sequence starting on 6/14, where upside action was able to penetrate the prior (3-Day) bar’s high.
That’s an indication of demand.
After upside penetration, price continued lower.
However, here’s the important part, LABD, closed higher and posted a higher low when compared to the prior 3-Day bar; subtle clues a reversal may be in the works.
There’s one more trading session needed to complete the current 3-Day bar and anything can happen.
However, based on the analysis thus far, it’s reasonable to expect LABD, to continue to post higher; that we’ve reached the extreme of downside action.
The 3-Day below shows the higher lows and includes a zoom of the area.
Adding to the reversal case, on a weekly close basis, SPBIO reached underside resistance during the week of 7/8. This week just past, it closed slightly lower (chart not shown).
Summary
It’s the weekend and so we have the usual suspects of bad news … any of which could be the butterfly in the amazon, the final upset for the markets.
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.
If so, during the next leg down, we may be about to get the revelation.
The previous post was valid but a little early … by one day.
As we’ll see below, If the current action holds, it’s a potential major pivot to the downside.
Biotech SPBIO, Daily Chart
The un-marked chart does not look like much at this point. However, the mark-ups below reveal the potential.
We’ll start first with an obvious trend-line.
Next, is a similar trend to the left of the original and then, a potential trend at the right edge.
Where it gets interesting, is when the chart is compressed to show the symmetry of the trading channel.
It’s hard to dispute that it does not exist … there it is.
Positioning
Currently short this sector via LABD (not advice, not a recommendation), with LABD entries at 27.58, and 29.29 for a combined entry of 28.11.
Trade identified as LABD-22-05, with current stop at the session low LABD 26.57.
Summary
SPBIO, is edging lower with near term support areas on the hourly chart (not shown).
We’re still at the danger point; price action can reverse its nascent down move.
However, this time the fundamentals could provide the backdrop; a potential black swan (of ‘side effects’) and especially if the overall markets (S&P, Dow, NASDAQ) have also reversed.
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 the CPI just released, the article at this link says, ‘the Fed’s work isn’t over.’
They’re so right; but it’s not the work they (at MarketWatch) think it is.
We should all know by now, the truth is right in our faces, but we have to be able to ‘see’.
What was seen yesterday, was that biotech appeared to be reaching an extreme.
As a result of the price action, a change was made in positioning out of (Basic Materials short) SMN and into a biotech short via LABD (not advice, not a recommendation).
Part of the reason to focus on LABD was the record volume as shown on the chart below.
Biotech 3X, Leveraged Inverse LABD, Daily
Note how the Force Index shows downward thrust energy is dissipating … even with the record down volume.
Next, we have the terminating wedge formation; indicating a potential reversal is at hand.
A wedge formation is a typical signal for an up-coming (potential) reversal.
It occurs at the tail-end of a sustained move; meaning a wedge is the last pattern to be formed. Sometimes there’s a throw-over (or under) and sometimes not.
Either way, it’s the end of the directional move.
After The Open
We’re just after the open; this is how it looks for LABD.
The first order of business is usually an attempt to close the gap.
As with the prior set-up in YANG, linked here, the objective is to allow LABD, close the gap as much as possible before adding to the existing position, LABD-22-05 (not advice, not a recommendation).
That may happen or not. This market’s already at a pivot extreme.
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.
At this link she explains to the kindergarteners (who even at this late stage, STILL believe the lie), the truth about ‘The Speck’.
Go to time stamp 6:37 and watch; you can clearly see her exasperation as she has to go through it one more time.
We also have this going on behind the scenes as well.
On the other side is the continuous stream of fear propaganda. Just go to your local TAAS (sorry, FOX) news outlet to hear the latest lie du jour.
With that in mind, let’s go straight to the index for the day, biotech SPBIO.
The last analysis proved to be flat wrong.
There was a breakdown as anticipated but that move did not follow through. It was the precursor to an up-leg which is where we are now.
Biotech SPBIO, Weekly Close
It’s obvious.
Last week was a test of the resistance (blue line).
Thís week started with biotech sharply lower (early today) but then coming back to test … where we are now.
That test is starting to reverse late in the session (around 3:00 p.m. EST).
Let’s go straight to the inverse fund LABD
SPBIO 3X Leveraged Inverse LABD, Daily
A very tight wedge has formed.
Price action attempted to break out but has come back for a test. This is where risk is least (not advice, not a recommendation).
Positioning
The Basic Materials short (SMN-22-01), while profitable, was not going as planned. That position was exited at SMN 14.29 … you can see it as the low of this session on your trading platform.
SMN 14.29, is me 🙂
That capital has now been used to position short biotech, SPBIO at LABD 27.58. trade LABD-22-05 (not advice, not a recommendation).
The current stop is the low of the day @ 26.98.
Summary
Even as this post is being generated LABD is pulling away from the lows. With about one hour left in the session, it’s at 28.18.
The LABD entry was an initial position; there’s plenty of capital left to increase the line if trade conditions warrant.
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.
Is this trade set-up still viable and/or worth the pursuit?
Short answer (at this point) is yes, and yes.
We’re going to look at the tape (the chart) and let it tell us what’s happening from a Wyckoff analysis perspective.
Since we’ve just past mid-session (12:37 p.m. EST), we’ll use the 4-Hour chart.
Biotech SPBIO, Leveraged Inverse LABD: 4-Hour
The unmarked chart above, looks like a mess.
Volatility everywhere in the past four sessions; including the Fed announcement on June 15th.
The marked-up chart below shows two distinct 4-Hour reversal bars.
Each of those bars were subsequently penetrated to the downside thus negating any entry signals.
However, it’s the next chart that draws from the secrets of Wyckoff analysis.
That is, “Shortening of the thrust”.
Discussed by David Weis in his training video, when thrusts become shorter, probabilities favor we’re nearing the end of the move.
As shown below, net downward thrusts on the chart have narrowed significantly.
Note that each downward thrust has successively less energy as shown on divergence of Force Index.
The next chart zooms-in.
Positioning
Based on the above, as much as price action gives the appearance of moving lower for LABD (higher for SPBIO), the energy to do so, appears to be spent.
Obviously, the accounts being managed have gone through a draw-down over the past trading sessions.
One account was stopped out @ 44.58 and then re-positioned at 44.01. The other account was allowed to draw down (not advice, not a recommendation).
The LABD-22-04, trade remains intact.
Summary
If the trend remains down for SPBIO, it’s highly unlikely the index will make new daily highs beyond this session.
If it does, then we can consider the trade set-up invalid.
A reasonable stop location at this point for inverse LABD, would be near or below the lows for the day (thus far), currently @ 42.37 (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.
The S&P bottomed out at 666.67, on March 9th of 2009.
Putting it differently; that’s 3/9/09.
When that ’09, bottom is discussed in the financial press, they quickly round it up “667”; nothing to see here.
Market Reversal
The S&P needs to print a new daily low to make it official but our chief cook and bottle washer, biotech, looks like it’s not waiting around.
Pre-market action in (inverse) LABD is already at a new daily high, corresponding to a new daily SPBIO, low.
Once again, the short position was exited during the last session and then re-entered (discussed below) towards the end of the day (not advice, not a recommendation).
Trade LABD-22-03 is closed out; LABD-22-04, now open.
Biotech SPBIO Inverse Fund LABD
The chart shows pre-market action is at this juncture; Fifteen minutes before the open.
The hourly chart below has entry detail along with the current stop.
LABD Hourly
Positioning
With the market to open gap-higher (SPBIO, gap-lower), the first order of business is likely to be an attempt to close that gap.
If there’s going to be an attempt, look for it within the first 90-minutes of trade.
From my firm’s standpoint, the actions are obvious: We’ll be looking to increase the LABD-22-04, position and continue to have a tight stop (not advice, not a recommendation).
Summary
Anyone accessing this site for any length of time is most likely, fully awake.
Go ahead and look up “June 21st” on this calendar; it all makes sense.
If this reversal ‘sticks’ and is the pre-cursor to much lower levels, we know ‘the enemy’ has not changed.
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® 