If the mainstream media is good for anything, it’s the ability to keep the herd, the retail, (Robinhood kids, et al.) fully distracted until it’s absolutely too late for action.
Even though this report from ZeroHedge gives all kinds of ‘signals’ saying we’re not there yet; It even goes as far as showing there’s no yield curve inversion. Of course that means ‘no risk’ of bear market.
Then going on to say, ‘None of these measures indicate a bear market is near’. I mean, you can’t make this stuff up.
What’s the table above (yesterday’s close) say about what’s really going on?
At this point it’s obvious the media are not going to discuss the on-going bear market in biotech, SPBIO.
Doing so, would require some kind of investigation as to why? That would open Pandora’s box and have everyone digging for truth … something to be avoided (censured) at all costs.
Amateurs always want (need) to know why.
Livermore was never concerned with the why. He looked for ‘what’. What is the price action doing now or what is it likely to do.
As Wyckoff said, ‘the why always comes out later … after the fact’
‘Why’ is a useless trading strategy.
However, in the case of biotech, we can take a good guess what the ‘why’ is all about.
Looking over the updates of the past few weeks, you can see how the LABD channel (above) was formed.
The trend has repeated with successive moves higher and the right side channel line moved as a result of price action.
At this point, we may be there.
If LABD closes the day at its current location or higher, it’s a good sign of channel confirmation.
In addition, we have Moderna (MRNA) in the process of penetrating the trendline shown in yesterday’s update. If price action continues lower (as it’s doing in the early session), it could be on track to post a weekly reversal.
Separately, the IBB (ETF) index is already posting a weekly reversal. From a momentum standpoint, the new weekly high of IBB, has put that index in a potential bearish (MACD) divergence provided it closes lower from here for the week.
The bearish case has been building even back to David Stockman’s assessment of ‘2-Trillion Dollars of Bottled Air’, during the summer of 2015.
However, Stockman does not trade. So, to figure out if ‘this is it’, is not in his repertoire.
With current events as they are, one can intuitively conclude the fundamentals have not improved for the sector.
The backdrop is there for significant downside.
With that in mind my firm remains positioned max short (not advice, not a recommendation).
Any selling in LABD that’s occurred over the past month or so, was to adjust account(s) for maintenance (margin) requirements.
Once the index was finished with its adverse (SPBIO, higher, LABD lower) moves, we’re right back to establishing a full position.
This type of action has been going on for months.
It’s tedious and not exciting; exactly the opposite of what a typical YouTube viewer is looking for.
As a corollary, there’s no artificial (and profit limiting) requirement to show ‘Monthly’, Quarterly’ or whatever gains, to retail customers.
The financial press takes care of the retail side.
Some (very few) actually escape; finding themselves on sites like Van Metre’s, Weis’, and this one.
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.
A steady sustained decline of tracking index SPBIO, is the best environment for highly leveraged (3X-inverse) fund LABD.
Biotech continues to be one of, if not the downside leader.
There has been no major break lower (LABD higher) that would draw attention to the index. That’s good in a way; it allows one to open positions (not advice, not a recommendation) while price action is relatively quiet.
It’s still a while before the close. LABD could even finish slightly lower and remain in the trading channel shown above.
Self-Employment Is Key:
It’s stories like this that highlight one way (if not the only way) to avoid being sucked into the first round of injections is to generate your own income.
It seems that everyone jumps on the bandwagon and tells us ‘how bad it is’ … very few do the work and show what can be done about the current reality.
From a financial market perspective, shorting biotech looks like the highest probability set-up (not advice not a recommendation) until such time that price action says ‘get out’.
So, that’s this site’s approach to generating income and being separate from any large (mandate enforcing) corporation.
‘Knock and Talk’
One last note on taking action. This is an example; offering a perspective on what can be done if there is a knock at the door.
Narrow your focus of ‘influencers’ to those who actually provide a service. Reduce or eliminate exposure to those who continue to peddle the fear without any kind of plan.