Category Archives: IBB

Biotech Breakdown

March 11, 2021 By in Biotech, BIS, IBB, LABD, Positions

Biotech ETF, IBB looks ready to complete its breakout test and reverse to much lower levels.

There’s a lot going on in this sector.

At this juncture, IBB appears to be the overall downside leader.

The link to this video is the first of its kind. There’ll be more to follow.

Judging from the comments section of ZeroHedge, looks like everyone’s pretty much awake at this point.

Just in case, here are 25-quesitons that can be posed to those still asleep.

Pay special attention to Question No. 11. & No. 12.

At some point you would think it’s all going to bust wide open.

Moving on to the chart:

IBB’s been in a terminating wedge for over a year. There was a ‘throw-over’ in February. Next, was downside penetration of the lower boundary. Now, we’re in a test.

That test can still go higher to contact the boundary underside. However, as posted yesterday, we’re already positioned short (not advice, not a recommendation) at the 38.2%, contact and rejection.

From a fundamental perspective, all the good news is out. Probably the last of any ‘stimulus’ will be figuratively mailed out by the end of the month.

Bonds look to be forming a bottom and the dollar as well.

Even so, the higher interest rates are already having an effect as home buyers are backing off. Lumber prices remain at insane levels.

Positioning:

Last session, the firm’s accounts went short biotech. Pre-market action in LABD shows a slightly lower open (higher for IBB).

The stops for both BIS and LABD have been provided in the last update. Be aware, the stop is loosely based on the tracking fund IBB.

If IBB posts a high above 154.60, its likely to attempt a 50% retrace.

One caveat:

There’s probably an accumulation of short stops (like ours) at the 154.60, high.

If there are enough, the market will automatically go one, or two ticks higher (154.62), to clear them out.

We’ll watch for that and adjust our stops accordingly. If this happens, it’s likely to be within the first 90-minutes of trade.

Charts by StockCharts

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.

Off With Their Heads

March 9, 2021 By in IBB, SOXS, SOXX, Wyckoff

Head & Shoulders patterns are showing up in several markets.

First, there’s biotech IBB … and now the SOXX.

The SOXX is higher in pre-market around +2.5% , +2.70%, near 385.25.

Conversely, inverse SOXS is down -9% to -10% near the 14.00 -area.

Today could be the day where risk is minimized to position short via inverse SOXS (not advice, not a recommendation).

If SOXX remains below yesterday’s high of 397.71, it has set itself up to break the neckline. Once that’s completed, we’d then have a measured move lower to around 320.

If short via SOXS, the stop would theoretically be yesterday’s low of 13.21.

We all know however, inverse funds and especially the 3X versions, have significant negative erosion.

If during the regular session, SOXX price action persists throughout the day near yesterday’s high (397.71), inverse SOXS will continue to erode below its own prior daily low.

A different view is the Right Shoulder has not been completed. We’ll know that if SOXX makes a new daily high.

It’s a myriad of scenarios and the professional understands there’re an infinite number of outcomes. However, at times, risk is reduced enough to take a position on a probable direction.

At this juncture and given the above conditions, the most probable direction is down.

One last caveat.

SOXX has broken below well established support. That puts it in Wyckoff spring position. The market will automatically attempt to rally as we see in the pre-market.

Based on the conditions described, we’re expecting that spring attempt (to new all time highs) to fail.

Charts by StockCharts

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.

Set The Stop

March 5, 2021 By in Biotech, David Weis, IBB, LABD, Positions, USO

“Set the stop and walk away”.

That was a phrase from the late David Weis, used during his training session video (link here).

That’s what we’re gong to do.

Biotech (IBB) is nearing support and it was thought the overnight would result in an obvious gap-down open, exit signal.

However, with just about a half-hour to go before the regular session, markets maintained their positions overnight keeping the door open for continued decline or counter-trend action.

All markets, the S&P, Dow, Nasdaq, (and biotech) are pivoting lower from insane valuations. We could be at the very beginning stages of a sustained deflationary move.

One example of how such moves behave, was the oil market in July of 2014. The tracking fund USO, had nine successive down months (declining over 60%), before a significant retrace.

With that in mind, we’re setting the LABD stop at the prior session low of 21.80 (not advice, not a recommendation).

With an LABD entry point at 18.08, being stopped out at 21.80, would yield a gain around 21%.

So, we’ll leave it there and move on to other opportunities.

The weekly has IBB, nearing support around 140 – 142 (dashed line). We can expect price action to hesitate as (or if) it encounters those levels.

Stay Tuned

Charts by StockCharts

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.

Overnight, Pre-Market

March 5, 2021 By in Biotech, IBB, LABD, Positions 1 Comment

Markets might continue their decline in overnight and pre-market.

If pre-market or early regular session has IBB trading near its target level, we’ll plan on exiting (LABD) in response; not advice, not a recommendation..

Every other active trader sees the H&S at this point and is probably waiting to close out (their shorts) at or near the bottom.

If so, it may result in buoyancy and the trade will start to degrade; exit is warranted under those conditions.

Charts by StockCharts

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 (AMGN) Breaking Lower

March 3, 2021 By in AMGN, Biotech, IBB, LABD, Positions

Amgen’s the largest cap in the biotech sector ETF, IBB.

Loss of momentum (magenta arrow) is clear.

Upside energy (weekly) MACD has been dissipating for over a year.

So, this is no transient direction change. Zooming into the daily chart shows hesitation at the trend line.

Then last Friday, a significant move away from that trend.

When there’s a trend break, typically there’ll be a test of that break.

In this case, such a test would cause price action to move higher; testing the underside of the trend.

Because there’s been so much congestion at the trend line, we may not get the upside move.

It may have already self-tested. From here, price action could just make its way down to the measured move target ~ 164 – 165.

Positioning:

We’re short this market via LABD (not advice, not a recommendation) and have moved the stop to 18.17, based on yesterday’s action.

Summary:

If AMGN decides to test the trend underside, it’s likely to stop out LABD.

If price continues to decline (unabated) to target levels, we’ll probably exit at pre-identified IBB, target ~ 138 – 140 (approx: 35 – 38, LABD).

Stay Tuned

Charts by StockCharts

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.

Active Trade: Short Biotech

March 1, 2021 By in Biotech, IBB, LABD, Positions

The last update on the short position in biotech, said we’re keeping it until stopped out or target met.

Currently the LABD stop is located at 17.21 (not advice, not a recommendation).

The biotech IBB chart shows us price action is verifying the existence of the Neckline; The two (arrow) hits on the right side.

The deduction we’re in an H&S top, at this juncture is correct.

If IBB makes a new daily low, with LABD making a new daily high, then we’ll be able to move the LABD stop higher.

That new level will be defined by price action itself.

Stay Tuned.

Charts by StockCharts

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: Downside Analysis

February 25, 2021 By in Biotech, IBB, LABD 2 Comments

The short position in biotech is active and now has downside targets.

These updates are an example of letting the market itself determine the (trading) course of action.

Yesterday, we said that price action itself will identify the stop on the short position.

We’re using LABD (3X inverse, IBB) as the trade vehicle; not advice, not a recommendation.

Looking at the daily chart of IBB, we’ve got what appears to be a Head & Shoulders top.

Two sessions ago, the neckline was completed. Yesterday, was a counter-trend move.

If we’re in an H&S top and that neckline is penetrated, it sets up a measured move target.

Getting back to the short on LABD. Our stop is yesterday’s high in IBB which loosely corresponds to the low of LABD (approx: 17.19).

The market itself defined the stop.

Now, we’ll follow this trade to its conclusion. The plan is either to stop out or exit at the IBB lower target.

Pre-market activity, LABD trading higher at about +1.00%.

Charts by StockCharts

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, Revisited

February 24, 2021 By in Biotech, IBB, LABD, S&P 500 1 Comment

So, the biotech short via LABD got stopped out last session.

Even though price action by its own behavior early in that session said to exit (at the highs), the position was maintained for the sake of argument.

The original stop was set at LABD 18.35, which was the 4-Hour low, noted yesterday.

Late in the session that stop was hit.

The overall sector (IBB) remains in a reversal with both daily and weekly MACD momentum indicators pointing lower.

In fact, Weekly MACD has a double bearish divergence in the histogram with MACD lines about to cross to the downside.

Putting all that together, expectation for inverse fund LABD is to head higher after yesterday’s counter-trend move.

Once stopped out (at LABD 18.33), LABD was re-established at a lower price (not advice, not a recommendation).

That entry price is on the weekly chart below:

We’ve switched to a weekly chart to show there are two other times in the past year, where LABD had three weekly up bars in a row.

Those reversals had narrow ranges and thus were quickly negated. This time it looks different.

The current bar is not complete but with the overall market (S& 500) at extremes and ratcheting lower, probabilities are high LABD will close higher for the week.

As for setting the stop on the new position, we’ll let the market decide.

Counter-trend action in the early session is usually over by 11:00 a.m. EST.

We’ll look at LABD at that time. Till then, hard (emergency) stop is located at the weekly LABD low of 15.96

Stay Tuned

Charts by StockCharts

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.

Trading Tip: Trailing Stop

February 23, 2021 By in Biotech, IBB, LABD, Wyckoff 1 Comment

Here’s one method to use for a trailing stop; Have the market itself tell you were it goes.

The reason brokerage trading platforms have so many options with an endless list of indicators, is that’s what the (retail) public wants.

It has nothing to do (as usual) with what works best.

Wyckoff himself said the market defines the course of action. The “tape” as he called it, was the master for decision making and no other.

Let’s look at what the tape is saying about LABD, the 3X inverse EFT of Biotech (IBB).

The sector has already been traded profitably last week. Shown on the chart below is another entry. Also shown, is what may be the most efficient method for stop placement.

For LABD over the prior weeks, we could have extracted a large part of its move using a trailing stop based on the 4-Hour chart.

LABD itself has defined that 4-Hour looks best at this point in time.

So, that’s what we’ll do (not advice, not a recommendation). The stop will be at the nearest 4-Hour low (currently, 16.27).

At mid-session today, we’ll move it up to the next 4-Hour low and so on until stopped out.

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.

Real Estate, Ready?

January 5, 2021 By in BIS, DRV, IBB, IYR, LABD, Positions

The real estate index IYR has been struggleing at resistance for months.  Yesterday’s action was a swift break lower to the bottom of the range.

Inverse fund DRV (3X inverse IYR) had is largest single day gain since mid-May of last year.

The weekly chart shows the four-month struggle at resistance as well as MACD bearish divergence.

IYR may attempt to test slightly higher (DRV down) during this session.

If so, we’ll be looking to position short via DRV; not advice not a recommendation.

Moving on to biotech.  Yesterday’s action was a good example of negative bias in LABD.  Even though IBB closed lower, LABD closed lower as well.

The LABD position was closed out as shown (above) and the BIS positions maintained.

Note the R-Exit value.

This represents the gain on the amount risked. If $1,000 was risked on the trade, it returned $8,540.

Update will be forthcoming if/when a DRV position is established.

Charts by StockCharts

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.