Category Archives: Biotech

Gold: Resistance & Retrace

December 3, 2020 By in Biotech, BIS, DUST, GDX, GLD

Instead of reversal in the overnight, gold went higher. 

Keeping with the potential down-trend theme, we’ll pull out to the next larger time-frame; the weekly.

The 23.6% retrace level, is approximately 172.60 – 172. 70, when measured on the weekly chart.  Pre-market action in GLD (as of 8:55 a.m. EST) is at 172.40 – 172.60 range. 

So, we’re there.

This is a good example of price action coming back to test wide, high-volume areas such as posted last week.  It’s what markets do.

From a trading standpoint, the DUST position could be stopped out if price action remains at this level to the open. 

Not a problem.  Every trading action results in creating another data point for a future entry.

Moving on to Biotech (IBB): 

Using LABD (3X Inverse IBB) as the high-volume proxy, it’s oscillating in a narrow range and essentially unchanged.

Separately, David Quintieri at the Money GPS, comments here, that he’s being chided for not giving financial advice and not indicating which stocks to buy.

In addition, Steven Van Metre, in this report states the Dollar and 30-Year Bonds are shorted to unbelievable, historic extremes.

He also states that ‘when the market finally reverses, it’s going to be violent.’

The wipe-out, when it comes will likely be on several fronts. 

Food supply

Power gird

Cyber attack

“Speck”

Markets

Riots

After those events transpire, figuring out which stock to buy won’t be anywhere on the list.

Stay Tuned

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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.

Bond Test

December 2, 2020 By in Biotech, BIS, Bonds, DUST, GDX, TLT 1 Comment

Bonds (TLT) were hit hard during the last session.  Are higher rates ahead?

The short answer is no … if the test shown in the TLT chart holds.

What we have is typical market action at a significant reversal. 

Putting it in perspective, the push below support (blue line) lasted a full three days before reversing higher.

Then we have twelve days of upward recovery until yesterday.  Price action was slammed -1.57%.

It might look like we’re headed back to lower bond prices and higher rates; in effect, what we really have is a test of the reversal.

You can almost feel it. A major event is near.

The equity markets at all time highs … extremes of ‘retail’ participation never seen before. 

Couple that with the largest-ever short position in the bond market (about to get squeezed). 

The dollar’s at the bottom of its trading range … gold already heading lower.

The sense is a major market reversal is very near.  It’s probably already happening but just not obvious enough … yet.

We’re not going long the bond market but rather going short other markets.

Most of the short position in DUST was exited during the last session when price action came back to the intra day highs.  The potential squeeze got a reprieve at least for the day.

It’s important to note, yesterday’s GDX move went to a near exact Fibonacci retrace of 23.6%.  The down-trend could proceed at any time.

Separately, a short was entered in the biotech sector via BIS (not advice, not a recommendation).

Pre-market activity (as of 9:02 a.m. EST) for IBB indicates a lower open with BIS correspondingly higher.

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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.

After The Close: Biotech

December 1, 2020 By in Biotech, BIS, IBB

Attempted breakout that failed … thus far.   That was today’s action for Biotech (IBB).

The (weekly MACD) divergence set-up has been in the works for awhile.  The first time weekly MACD was discussed was this report nearly two months ago.

With the Dow reaching an apparent top last Tuesday and with other markets (S&P, NASDAQ) following suit today, there’s potential we’re at a pivot point.

Note that Biotech’s all time closing high remains IBB 145.80, reached back on July 20th, this year.

Volume for today’s session increased 43% over yesterday. However this session only pushed 0.23%, higher; opposed to a 1.23%, gain on Monday. 

Upward progress slowed significantly in the face of higher volume.  The bulls are tired.

While external world chaos rages, here, here and here, we’re focused on price action and taking advantage of low risk opportunities.

The response was to go short via BIS (not advice, not a recommendation) at BIS 25.61, with a stop set at BIS 25.46.

Note on stops and trading:

Every speculator has their style.  We’re perfectly comfortable getting stopped out and re-entering several times on what is considered a viable set-up.

The current position may be stopped out at the next session.  Depending on the price action at the time, the bearish divergence on the weekly may still be in effect and allow for a re-entry into the trade.

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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.

Biotech Short: Initial Entry

December 1, 2020 By in Biotech, BIS, IBB

At this juncture, 1:12 p.m. EST, IBB has retreated from the all time highs.

A close below resistance at this session would be significant

Just 1.99-points shy of the target: Initial short via BIS @ 25.60 (not advice, not a recommendation).

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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.

Biotech (IBB) Nears Target

December 1, 2020 By in Biotech, BIS, DUST, GDX

Pre-market activity shows IBB near 147.00, just 3-points away from the 150, target and right at the high set on July 20th, this year.

If IBB reaches that target (this week), it would automatically set-up a bearish divergence on the weekly chart.

That divergence would be on both the MACD lines and the histogram … a rare occurrence.

It’s not an automatic short entry (via BIS).  It’s a low risk area that’s important to watch.

In other markets, gold (GLD) has rebounded, up about 2% in the pre-market. However, price action remains in a congestion area of both resistance and support between 165 – 170.

The miners GDX are up as well and also hitting the underside of resistance. 

In addition for GDX, the 35.80 – 35.90 area is a 23.6% Fibonacci retrace for the entire down move that started on August 5th this year.

From a trading perspective, we’re short the sector (not a recommendation, not advice) and have a stop in DUST that is likely to be hit at the open.

If this action in GLD and GDX is just short-covering, we’ll know fairly soon. Under such conditions, price action begins to erode quickly as the shorts cover and the bulls are too weak to keep prices higher.

The short (DUST) position may be re-established (not advice, not a recommendation) during this session or following ones.

The bearish assessment of the mining index (and gold) has not changed. Gold and the miners may be leading the way down as reported here. 

The market will do everything in its power to make sure it throws off and frustrates as many bulls/bears as possible.

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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.

Biotech: Upside Breakout

November 27, 2020 By in Biotech, BIS, IBB 1 Comment

Wedge patterns are the end of the line.  They typically come after a sustained move whether it’s up or down.

IBB has been oscillating and coiling for weeks.

The last trade in this sector was a short position (via BIS), opened October 14th, then closed the next day for a gain slightly higher than 4%.

Back then, the thinking was IBB is to make new highs just before the election (in turn posting a bearish MACD on the weekly) and then reverse.

It didn’t happen.

This is the way of the markets.  Setups begin to form, come to fruition or fade away. 

Contrary to what the advertisements say (to lure the uninitiated), you don’t “work five minutes a day” and achieve phenomenal success.

It’s just another lie … at this point we should all be used to that. 

If IBB continues higher in a measured move to the 150-area, it will push past resistance and post all time highs in the process. 

It could set up for a bearish MACD divergence as well.

If and when this happens, depending on price action, we might see another low-risk area for a short position.

Stay Tuned.

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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.

Amgen: Head & Shoulders

October 31, 2020 By in AMGN, Biotech, BIS, IBB

Like Newmont is to GDX, so is Amgen to IBB. 

It’s the heavy hitter. If we decipher what’s going on with it, then we can trade biotech for (potential) profit.

The chart shows price action began to retrace off the lows for the week.  In doing so, it created a possible neckline.

The 38% retrace area, marked with the dashed line, also shows it’s a juncture between weekly bars; the circled area.

That’s a trading tip … watch the circle.

If price action gets to 38% and stalls, it shows weakness. 

Our interest is to look for shorting opportunities.  Specifically, via the 2X Inverse Biotech, BIS. 

For years now, except for energy (nat-gas) and commodities (corn, wheat, et al), markets are being worked from the short side.

Steven Van Metre presents an excellent case for a deflationary impulse first before there’s any inflation.

The ‘macro’ as he calls it, provides a backdrop for what’s really going on. 

For now, the action (not advice, not a recommendation) is to watch AMGN play out.  If the trading is choppy, overlapping and laboring into the 38% level, then we have our answer.

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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.

Biotech In Position

October 27, 2020 By in Biotech, IBB

Biotech (IBB) is now in position to move higher as a test of the trend break from Monday, the 19th.

The chart shows IBB has retraced 68% of the move from the September 4th low, to the October 14th high.

That’s a deep pull-back and suggests weakness. 

However, after a trend-line break, it’s typical market behavior to mount some kind of rally to test the break.

If that happens, part of the test could be a new high. 

We already have a weekly MACD divergence (possible). If the test occurs soon enough, there could be a daily divergence as well.

Weekly and Daily bearish divergences. We’ll see.

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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.

Lying In Wait

October 19, 2020 By in AMGN, Biotech, BIS, IBB, LABD

That’s exactly what’s happening with biotech (IBB) and more specifically Amgen (AMGN).

Just like with Newmont and GDX from the previous update, Amgen’s the heavy hitter for the biotech sector.

What we see on the daily chart below and expandable version here, is that AMGN’s at the danger point.

Price action penetrated well established support and then stopped dead (so far).

If that’s the case, we’re looking for price action to rebound and move toward the 242 – 244 area; a 50% retrace from current levels.

If that point is reached, depending on the behavior of price action itself, the expectation is for a long-term reversal.

There have been several trades using BIS and LABD with the overall result being about break-even to slightly down.

More important than outright profit is the trading insight (over several months) into the sector itself.  That insight can only come from active positions. 

No amount of ‘paper trading’ or external analysis will provide a visceral feel for the market.

Summary: 

We’re waiting for price action in AMGN and the overall IBB, to counter-trend upward as we head into November.

If there’s an obvious reversal at that time (not advice, not a recommendation) the risk on a short position may be at its lowest.

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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.

Biotech: Election Top Closer

October 17, 2020 By in Biotech, BIS, IBB, LABD

The October 4th, update proposed a top and reversal for Biotech (IBB) at or near the election.  November, 2nd , or 3rd, could be new highs followed by an immediate reversal.

Fibonacci week 34, from the 3/16/20 lows, is the week ending on Friday, November 6th.

The daily chart (below) has a trend that’s been confirmed; If it remains intact for the next three weeks, it will lead us straight to new highs at the beginning of November.

Following price action in this way allows for preparation. 

Timing, position size and stop levels can be (and must be) planned in advance. Not a recommendation, not financial advice.

The topping formation in biotech has been followed and traded (via BIS and LABD) by this firm since early June. 

Doing so, forces one to be accustomed to the behavior of the sector. 

Behaviors such as counter trend action in IBB, tends to be complete and resume original trend, right around the 10:00 a.m. to 10:30 a.m. time-frame.

That’s a data nugget that can’t be obtained by parachuting into a sector, taking a position and hoping it all works out.

A perfect (short) trade set-up would be for price to gap-higher into the 2nd, or 3rd (November) and allow for an entry with a well defined stop … such as the top of the gap-bar.

Of course, at the open this Monday, IBB could break the trend-line and create an alternate scenario … anything can happen.

However, at this point, probabilities and momentum (although waning) favor continuation upward.

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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.