Biotech (Short), The Details

Relentless Positioning For The Downside

Like a terrier on a mailman’s leg, positioning short biotech via LABD, has been relentless (not advice, not a recommendation).

This update details the current positioning via 3X, Leveraged Inverse Fund, LABD.

This is not investment advice; this site has no obligation to provide the following information.

However, as stated in the About section, one of the purposes here, is to document trade actions and results.

With that in mind, the green arrows show the locations of LABD entries for the short-biotech (SBPBIO) trade identified as LABD-22-05.

Biotech SPBIO, 3X Leveraged Inverse Fund LABD, Daily

The magenta arrow at the far right of the chart, is the ‘break-even’ point. It’s about 1.75 – 2.0 points away from the current price.

Note: This is not ‘Dollar Cost Averaging’.

Few in the industry know that ‘dollar cost averaging’ is based on a scam conducted by the bucket shops in the early 1900s.

It’s comforting to know, that method (the scam), has made its way into at least one SEC certification requirement.

There, I feel much better 🙂

One of, if not the main reason for working this trade with the current method, is the real danger this market could ‘implode’ at any minute.

We’re just one (un)planned event away from being down 20% – 50% overnight.

Biotech SPBIO ($SPSIBI), Weekly Close

The weekly close shows SPBIO to be unique among all the major indices (miners excluded).

Not even the sister index IBB, has the weekly MA cross (black arrow) to the downside.

“You Are Here”

On the chart below, the complete positioning short SPBIO is shown as the magenta rectangle.

Also shown, are measured move targets.

Looking at the potential of this trade, the reason for the dogged persistence becomes clear.

Summary

As always, anything can happen … the trade could fall apart.

That’s true.

However, probabilities for continued market downside are increasing, not decreasing.

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.

The Danger Point®, trade mark: No. 6,505,279

Three Amigos of Biotech

BEAM, TWST & FATE

It looks like having a real (positive) P/E, may be about to be important.

The prior biotech update said that so far, no P/E, negative P/E, and ‘no money down’ was not affecting the sector.

That is, until now.

Well, ok. I made up the ‘no money down’, part. 🙂

That little jest does not take away from the fact, biotech SPBIO, and its top three weightings, BEAM, TWST and FATE, have all reversed, decisively to the downside.

For the week just ended, BEAM is down – 22.86%, TWST down – 19.18%, and FATE down – 14.16%.

Back at the ranch in the IBB index, Moderna (MRNA) is also down – 14.65% for the week.

So, we have confirmation the entire industry is now continuing its downward course.

Contrast the reversal of index SPBIO, at – 7.04%, with S&P (SPY) at – 1.16%, and the market itself is telling us where to go for opportunity (not advice, not a recommendation).

At this point, all three amigos (BEAM, TWST, FATE) are in downward trading channels.

Trading channel for BEAM is the most aggressive. The weekly chart is below.

Beam Therapeutics (BEAM) Weekly

If BEAM maintains its channel for the rest of this year, the chart below shows the target area(s) for price action.

The coming week may let us know if this channel will be confirmed or negated.

Recall, the S&P is topping out and appears to be reversing.

Goldman says the squeeze is over but that ‘downside is limited’.

We’ll see.

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.

The Danger Point®, trade mark: No. 6,505,279

The Moderna (MRNA) Channel

Chief Cook & Bottle Washer

We’re about forty minutes into the session; Moderna (MRNA) has just confirmed the up-thrust reversal discussed in the last update.

It took seven trading days for MRNA, to post a new weekly low below 160.06.

That was plenty of time to perform research like finding this bullish outlook and deciding for oneself, whether to be bull or bear.

This update is brief.

Two charts of MRNA, are shown below.

Price action’s in a channel with the right side declining at approx: – 93.7%, annualized.

Moderna MRNA, Weekly Bar

Compressed version.

We’re using MRNA, as the proxy for the biotech sector.

The previous report showed a weak 23.6%, retrace and potential reversal.

With today’s print below 160.06, it looks like an initial confirmation of the right-side trend line (not advice, not a recommendation).

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.

The Danger Point®, trade mark: No. 6,505,279

Biotech … Bulls/Bears

Fight Between Support & Resistance

Last Friday’s action was volatile with the op-ex short-covering apparently coming into play. Biotech was affected more than any other index.

If it really was short covering, then we already know what’s likely to happen next.

First, we’ll go over the charts and then build a case for the next probable direction.

The focus is on SPBIO, instead of IBB, as it’s the weakest of the two indices.

From a weekly standpoint, this is where SPBIO, left-off this past Friday.

Biotech SPBIO, Weekly Bar

Adding the mark-up to show we’re at support and resistance.

Getting closer in on that area.

We can see based on the price action itself, we’re at an important juncture.

Two years ago, in March of 2020, price action formed a support level.

Fast forward to now.

Price action bounced off that same level, attempted to move higher (for over three weeks), was rejected, moved lower, and last week, came back up for an underside test.

Most Probable Direction

If there was a short squeeze as a result of options expiration, fuel for that move is gone.

The options have expired.

in addition, that fuel was only able to get SPBIO, to the underside of resistance.

So, you can see where this is going.

Upside fuel is gone. SPBIO, is currently at underside resistance; most probable direction is down.

Measured Move

If the action from all-time highs during the week of February 12th, 2021, to the current support/resistance area is a trading range, then we may have a ‘Measured Move’ target as shown.

Under the current conditions, i.e., financial, societal, collapse along with the ‘elephant‘ going mainstream, a downside objective that’s an – 85.6%, decline from all-time highs, is entirely reasonable.

The 3X Inverse LABD, Weekly

The unmarked chart

First, the rule of alternation.

Last time is not this time.

Last time there was a reversal bar and the next week continued lower, then lower again and so on.

The rule of alternation says, whatever happened last time will not happen this time. Price action will (likely) have a different form.

Obviously, if the short squeeze referenced above is over and the trend remains down, one could expect LABD, price action to be higher at the next session (SPBIO, lower).

Positioning

The weekly chart shows progression and location of the stop orders on LABD-22-03 (not advice, not a recommendation).

The initial stop has been moved up to last week’s low.

There may be a trading channel as well.

Potential exit target(s) if not stopped out, would be contact points at the upper channel line.

Summary

If the position is stopped out at the next session, we’ll re-evaluate.

If not, and SPBIO, continues to move lower (LABD, higher), we’ll be looking for additional confirmation of the right-side trend line and the next likely area to move the stop.

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.

The Danger Point®, trade mark: No. 6,505,279

Biotech … Squeeze or Test

Maybe, Both

If we look at it from the perspective of an up-thrust test, as we’ll do below, such tests if they don’t fail are the precursor to dynamic moves.

At the minimum, today’s action allows the stop to be moved on short position LABD-22-03 (not advice, not a recommendation).

It’s interesting, the biotech sector both IBB and SPBIO, with inverse funds BIS, and LABD, respectively are the only ones taking a major hit today.

Using a cue from Nicolas Darvas and his observations (as a dancer), the market will initially go opposite its main direction as if to get ready for the move; like a dancer crouching down before lifting the female partner.

That may or may not be the case now, as we’ll see below.

Biotech SPBIO, Weekly Chart

Next, we’re going to invert the chart (to mimic inverse LABD) and then label the up-thrust as a Wyckoff ‘Spring’.

Biotech SPBIO, Weekly Inverted

Next, we get closer to the action as shown.

Is the ??? area, a test or a failure of the set-up?

The short answer with about 90-minutes to go before the close, is unknown.

If SPBIO, closes down for the week, painting a red bar, probabilities are to the downside.

Closing higher for the week starts to bring a potential failure of the trade into question.

Summary

No matter what happens, the stop on the short position via LABD is going to be moved to the low of this session; currently LABD 49.90 (not advice, not a recommendation).

We may get into speculation later, on why biotech seems to be the only index in a major squeeze, preparing for downside.

Some who monitor this site, and those ‘awake’, may already have a good idea as to the potential why.

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.

The Danger Point®, trade mark: No. 6,505,279

Biotech … ‘Brace for Impact’

Downside Leader

From the outset of the bull market’s end, biotech has been the downside leader.

Of the two indices being tracked, IBB and SPBIO, the latter of the two, is the weakest.

Over the past several weeks, it’s been like a terrier on a mailman’s leg concerning positioning short this index (not advice, not a recommendation).

In the end (as we’ll see below), it turns out that waiting for an actual penetration, print, and close above resistance, was the best approach.

Now, it’s obvious, we’re in a reversal.

The unfortunate part from an economic standpoint, this could be the next big leg lower.

Biotech SPBIO, Daily Close

Penetration and close above resistance (blue line).

Then, price action retreats below resistance and back into the trading range; Wyckoff, Up-Thrust (reversal).

It’s important to note, if SPBIO closes at this level or lower, the prior analysis of ‘grinding to a halt‘ on a weekly close basis, remains valid.

Positioning

Right or wrong, the short position LABD-22-03, was never fully exited (not advice, not a recommendation).

Everyone has their own style.

From a personal standpoint, I despise ‘chasing’ the market. Chasing is for the lazy or frightened who are too afraid to pull the trigger. No thank you.

In fact, the LABD-22-03, position was increased near the end of yesterday’s session.

The intuition, the gut feel, if you will, was ‘This sector’s going to reverse. When it does, it’s going to reverse hard’.

With today’s pre-market action (about fifteen minutes before the open), LABD, trading higher by 3.10-points, or +6.35%, that intuitive assessment is proving correct.

At this point, an obvious stop level would be yesterday’s LABD, low @ 45.77

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.

The Danger Point®, trade mark: No. 6,505,279

Economic Free-Fall

Anecdotal Data, Says Implosion

As we speak, economic activity is shutting down … fast.

Amazon shipments cancelled, gas stations going dry, banks halt lending, real estate sales collapse.

Meanwhile, the market’s in a short-squeeze.

What happens next?

We’ll discuss real estate and biotech farther down but first the data sources.

Dan from i-Allegedly reports here, he still has a couple of rubes (my word) that think the market just bottomed out.

Good luck with that.

As we’ll show below, the real estate bear market (IYR) rebound, was identified ahead of time.

Next, we have Red Hurricane describing one semi-trailer load after another being cancelled. He hauls for Amazon.

Shipping activity’s contracting, seemingly, by the minute.

Lastly, this link where the D-word, ‘Depression’ is used within the first one-minute, twenty seconds.

Bottom-out in the stock market? Probably not.

So, let’s take a look at real estate IYR, and see where it might go next.

Real Estate IYR, Weekly Chart

The last update (link, here) showed potential to rise into a test of resistance. That’s exactly what happened.

Back then:

And now:

With zoom

Obviously, the upward test happened much quicker than anticipated … but it was anticipated … no surprise.

Real estate got itself into Wyckoff spring position; so, a rebound (test) is normal market behavior … short-squeeze or not.

If it was a squeeze and if it’s over, we can expect an immediate drop in price action. We’ll analyze that as it plays-out in the coming week.

Now, on to biotech, SPBIO

Biotech SPBIO ($SPSIBI), Weekly

Some housekeeping first.

Obviously last week, with being short, more downside action was anticipated resulting in upside for LABD.

On Friday, that did not happen. Biotech was part of the squeeze as well.

The short position via LABD, identified as LABD-22-02, was reduced but not exited completely (not advice, not a recommendation).

At present this is where we are.

First, we’ll start by inverting the chart to mimic the action of 3X inverse, LABD.

Next, we’ll zoom-in and highlight the ‘squeeze’.

Doesn’t look like much when viewed that way does, it?

Next, we’re going to zoom-in, on the zoom

In spite of all the squeeze chaos on Friday, price action could not post a new weekly low (high on the non-inverted).

We’ll see this Tuesday, if that’s important or not.

This post is getting long but let’s end with the rule of alternation. The same chart is marked up below.

If this rule is still in-effect, we’re at a juncture where one can expect a ‘simple’ alternation.

We’ve already had complex action on the prior congestion; so, we can expect current action to be simple in character.

That means, price action’s not likely to stick around at these levels whether it’s going up or down.

Based on the above analysis, the expectation for Tuesday’s open is a gap lower for SPBIO and higher for LABD.

If that does not happen, something else is at work … we’ll report on that as necessary.

Summary

Has the market bottomed out? Not likely.

Those who are at this late stage, still arguing with Jerimiah Babe and Dan (and Patera), that the market’s rebounding, everything’s fine, are in a state of delusion.

The mindless herd following spending with ever newer cars, moving up to the McMansion, opulent vacations, posting it all on Facebook is most decidedly, gone.

It’s finished. It’s Done.

The problem is, as J.B. notes above (time stamp 7:15 and 8:30), those still living that life don’t seem to know it’s over.

For the leaders, the tiny minority and those reading this post, who are, or who have been preparing for years, it means potential huge (life changing) opportunities.

That is, as long as the markets, the banks and other infrastructure stay open; not guaranteed in any way.

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.

The Danger Point®, trade mark: No. 6,505,279

Biotech … The Breakdown

Wedge Break Has Been Tested

It’s been a while since we’ve talked about the chief cook and bottle washer in this whole financial collapse scenario.

However, biotech has not been forgotten.

There are two indices (ETFs) being tracked: IBB and SPBIO.

Both entered bear market territory long ago. SPBIO topped out, way back in February 2021; IBB topped later, in August the same year.

Leveraged inverse funds are LABD, and BIS, respectively. LABD is 3X inverse with BIS a 2X inverse.

The Long Term

One thing unique to David Wies, was to look at the long term: Monthly, Quarterly and Yearly charts.

Doing so, puts one in a strategic mindset … not easily swayed by the latest prattle from media sources.

If we look at biotech, IBB, on a quarterly basis we have the following chart.

Biotech IBB, Quarterly

The mark-up of this chart is where it gets interesting.

A terminating wedge that’s been over seven years in the making has just broken to the downside.

Not only that, when we get closer-in (on the weekly), we can see the wedge break has been tested and now today, appears to be reversing to the downside (shown on daily).

Biotech IBB, Weekly

With zoom

The daily shows a Fibonacci retrace to 38%; then today, a downside reversal.

You can see where this is going.

Based on the above analysis a short position in IBB, has been opened via BIS (not advice, not a recommendation).

The trade is BIS-22-01, with an (initial) entry @ 28.5173

Summary

The news on specific biotech companies is already out if one knows where to look.

Stated time and again on this site, we’re just in the beginning stages of the repercussions.

It even looks like they’ve moved on from the initial scam and are cooking up a new one.

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.

The Danger Point®, trade mark: No. 6,505,279

Last Time … is not … This Time

The Rule of Alternation

That’s it in a nutshell. What happened last time, won’t happen this time.

The market reveals its own secrets; you just have to know where to look.

An entire industry has been (purposely) built to make sure the ‘average investor’ never finds the truth of the markets.

That industry is the financial analysis industry; the one with the P/E ratios, Debt-to-Equity, and so on.

Sure, it was a tongue-in-cheek post to use the fact that Carvana had no P/E (linked here).

I’m not certain if they ever had a P/E; probably not.

However, that financial, i.e., fundamental(s) fact, did not keep the stock from going up over 4,529%, in four years.

It should be noted, the Carvana analysis was done on a Saturday (as has this one). At the very next trading session, CVNA posted lower, started its decline in earnest and never looked back.

Not saying that exact thing (timing it to the day) will happen with our next candidate real estate; as said before, part of Wyckoff analysis (a lot of it, actually) is straight-up intuition.

The good part from a computer manipulated and controlled market perspective, intuition can’t be quantified.

So, that’s your edge.

Let’s move on to ‘last time is not this time’ and see what the real estate market IYR, is telling us.

Weekly Chart, IYR

We’ve got the weekly un-marked chart of IYR, below.

The ‘alternation’ is there.

Here it is, close-up.

The first leg lower had some initial smoothness but quickly became choppy and overlapping.

Not so, now.

We’re essentially heading straight down.

Fundamentals

From a fundamental standpoint, real estate is finished. However, it’s been finished for a long time.

The fundamentals won’t and can’t tell anyone what’s likely to happen at the next trading session … or any other session.

The market itself (shown above) is saying the probabilities are for a continued decline; posting smooth long bars until some meaningful demand is encountered.

As shown on the last post, if the trading channel is in-effect, that (chart) demand is a long way down.

Positioning

Shorting IYR via DRV, has been covered in previous posts (search for DRV-22-02).

The following weekly chart, is marked up with two arrows.

Arrow No. 1

Initial short position via DRV was opened late in the day on April 28th; the day before the market broke significantly lower (not advice, not a recommendation).

Arrow No. 2

As the market headed lower during the week just ended, the size of the DRV position was increased by 36%.

Currently, the gain on the total position is about +22%.

At this juncture, the DRV stop is located well in the green in the unlikely event we get a sharp IYR, upward move in the coming week.

Summary

Under ‘normal’ conditions one could expect some kind of upward bounce in the days ahead.

However, as shown already with big cap leader PLD, the situation’s anything but normal.

Highlighted in earlier posts, biotech is leading the way with SPBIO, currently down – 59.8%, from its highs.

Biotech IBB, with chief cook and (globalist) bottle washer Moderna (MRNA), is down – 36.2%.

As Dan from i-Allegedly has stated time and again, we’re already in a depression.

So, buckle your seatbelt Dorothy …

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.

The Danger Point®, trade mark: No. 6,505,279

‘Heart Failure’ … The New Normal

… What It Could Mean For Biotech

So, now it starts.

This just out from ZeroHedge, linked here, shows the ‘elephant’ has begun to go mainstream.

Another chess-move.

At least one previous post (No.1, linked here), has shown the phenomenon is not a one-off event.

Now, according to the link above, there’s an estimated 300,000 affected … and we’re just getting started.

Insiders Sell … Retail Buys

Do those at the highest levels know their customer base is about to evaporate on a world-wide basis?

While they may not know every detail, they at least know something’s up. Steven Van Metre discusses the insider selling in his latest update, linked here.

Front End Phenomenon

We’re still at the beginning stages of an event that in the opinion of this author, is going to last the lifetime of those reading this post.

‘Hyperbolic statement’ one might say.

To that, I would counter with this; when it was posted, the ‘elephant’ was hyperbolic as well.

Now? Not so much.

Keeping that long range thinking in mind also keeps one from choosing the ‘insane’ human behaviors discussed by Dan (I Allegedly) in his latest post.

So, let’s take a look at what type of insanity we have going on in the markets today.

Of course, that points us to our chief cook and bottle washer, biotech (IBB).

Biotech, IBB

When we last left our hero, savior, and protector of all that is natural immunity, the biotech discussion was on Moderna (MRNA).

The thrust higher, detailed in this post was thought to be too fast for a sustained reversal. Well, it was right and wrong at the same time.

Moderna wound up reversing … sort of.

At the same time, the biotech sector headed lower to support and is now moving higher.

The weekly IBB, chart has the support (lower blue line) and potential up-thrust location (also 50%, retrace) identified.

The zoom shows the narrow gap between the weekly bars and 50% retrace.

If price action makes it past the resistance bars and into the gap, IBB would then be in up-thrust position (not advice, not a recommendation).

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.

The Danger Point®, trade mark: No. 6,505,279