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.
Wyckoff (tape reading) analysis identified the potential reversal in XBI.
In the past two days of trading, biotech XBI, is decisively lower (not advice, not a recommendation).
However, there’s more to this story.
As we’ll see below, Fibonacci is at work as well.
Biotech XBI, Daily Close
From closing high on 2/27/24, to closing high on 9/19/24, was a Fibonacci 144 days (minus one).
Ladies and Gentlemen, it doesn’t get much better 🙂
The black lines show resistance penetration, up-thrust and reversal.
Livermore, Wyckoff & Loeb
The trading methods of the three market masters above, can be summarized as:
Strategy, Tactics and Focus.
Livermore’s method of ‘what’s going to happen in a (potential) big way’, pointed to biotech.
Wyckoff’s analysis was used to identify (to the day), the potential for a significant reversal.
Loeb, who is less known, was the former Vice Chairman of E.F. Hutton, disparaged ‘diversification’ as the ‘averaging of errors’; meaning, if you don’t know what you’re doing (in the markets), you ‘diversify.’
We can see all three at work in the selection to go short biotech via LABD (not advice, not a recommendation).
Fixing Errors
For those watching, you got to see up close and personal a trading error on shorting the SOXX; specifically, an -11.6%, hit, link here.
As of this post, four trading days later, that loss has been fully recovered and then some.
This is how should be done.
Clear the mind, look for (don’t force) another opportunity, get to back to business.
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.
It was just four days ago, the mainstream (in this report) was telling us, be on the lookout for a biotech breakout.
That was then … here we are now.
Price action in XBI, attempted to break higher at the Fed announcement.
That move appeared to fail by the end of Wednesday’s session … then came Thursday’s launch higher.
However, that move may have failed as well.
Biotech XBI, Hourly
At this point, we’ve posted a Wyckoff Up-Trust (reversal).
If this is a significant reversal, we’re still in the very early stages; at The Danger Point®
Positioning
As can be seen in the sidebar, a short position was opened (yesterday), LABD-24-18.
That position has been increased in size during this session (not advice, not a recommendation).
The SOXX (short) Exit.
Yesterday, SOXS-24-16, was exited with an -11.6%, hit; so, everyone can see the effects of breaking one’s discipline (not respecting the position stop).
Don’t force the trade … sounds so simple.
Getting back to work, the XBI false breakout was recognized early and the trade opened.
Today, so far, we have follow-through, confirming the reversal.
Bonds Continue Lower
Bonds, TLT, are currently posting an outside-down (reversal) on the weekly timeframe.
The last time there was an outside-down on the weekly, was over two-years ago; week of August 5th, 2022.
After that, bonds declined a whopping 32% before (slightly) recovering.
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.
Those ready (positioning) for this potential historic reversal in the major indices, are at long last getting the sense, ‘The jig is up’.
As Dr. Elder has said, ‘the markets will hypnotize you’. They will lull you to sleep and then reverse with a vengeance.
So, it may be with our example of the day, Merck (MRK).
No-Brainer … To Brain-Dead
Back in the day when posting on SeekingAlpha, Merck was a no-brainer amongst the grifter crowd.
Since fundamentals don’t move markets, and Merck continued to grind higher week after week, month after month, one could publish any amount of ‘research’ and look like a genius.
Oh, how times have changed.
As we’ll see below, Merck has been in a massive topping pattern, or Wyckoff Up-Thrust.
Merck, MRK, Weekly
There’s a lot going on with this chart.
It’s been about seven-months of grinding at the highs, only to break down on heavy volume the week of August 6th.
Then, it was five weeks of ratcheting higher in a test, reversing this week.
Note the testing action was in response to the wide high-volume bar.
As David Weis said in his video, wide high-volume bars tend to be tested; here we see evidence of that action.
As always, anything can happen and Merck could levitate higher. However, we can see just from the chart alone, that prospect looks like a low probability (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.
Those monitoring this site are witnessing the search (for the short entry) in real time.
As said in the prior update, just because Fibonacci lines up, both in time and distance, does not guarantee anything.
From a Wyckoff perspective, as a result of Wednesday’s XBI price action penetrating the prior days’ low, and then stopping dead, there was a probability of a (minor) spring … which we got the very next day.
By the way, that upward move (yesterday) carried the XBI, near another Fibonacci retrace level: 61.8%.
As a result, the LABD-24-17, was exited with about a 3.6% loss (not advice, not a recommendation).
Now, on to the action at hand.
Real Estate IYR, Daily
Depending how price action progresses, we’ll go into more detail on the technical condition.
Today printed a new daily low and we have an MACD (bearish) crossover still in effect.
Trade action was to go short via DRV with a representative stop (for DRV) one tick above the IYR high: 95.96 (not advice, not a recommendation).
Admittedly, it’s a tight stop and that’s the point.
If IYR turns and starts to exhibit buoyancy, we don’t want to hang around.
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® 