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 last update, presented a case for the SOXX top, a proxy for A.I.
Note: If the SOXX, has made its final high, it’s still very early in the reversal:
Wyckoff said a century ago, ‘It’s as if the weight of a feather can move the market in either direction’.
That’s where we are now.
For biotech (IBB, XBI), different forces are at work.
Biotech IBB, Weekly
The 38.2%, retrace from 9/19 high, to 9/25 low, is in the vicinity of 140.90 (magenta dashed line).
Fridays are typically biased to the upside.
There’s a possibility IBB, may test (upward) throughout the session, heading to (at or near) 38%, by the end of the day (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.
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.
Unfortunately, the (mad scientist) graphic at left, is not too far removed from what’s really going on in biotech.
While the S&P, Nasdaq Qs, Gold Miners, Semiconductors, Financials, The HOOD, ORCL, and others, continue to make all-time highs, conspicuously absent is biotech, XBI and IBB.
Now, it appears that quietly, in the background, XBI is reversing to the downside.
Biotech XBI, Daily Close
The up-thrust is there, but is a weak penetration of resistance.
Even so, on the ‘test’, volume contracted by -49.24%, when compared to volume on the upside penetration.
Until proven otherwise, this set-up appears to (currently) be the best short opportunity.
With that said, all other short positions have been closed to focus on biotech.
Leveraged inverse fund LABD is being used at this juncture: Trade LABD-25-10, with stop at the session low (not advice, not a reocmmendiaton).
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.
There are sure to be plenty of post-mortems over the weekend; usual suspects giving us their assessment on what’s already happened. 🙂
Sometimes the question, is not ‘what’s happened’, but ‘what has not happened’.
That’s where the opportunity may lie.
Market Implosion
Over the past week, there were wide price bars, with action unstable in all major indices (ETFs): DIA, IBB, IWM, IYM, IYR, QQQ, SOXX, SPBIO, SPY, XLF, and XOP.
However, what did not implode (completely), are the car dealerships; specifically, CarMax and Carvana.
For this update, we’ll look at CarMax.
CarMax, KMX, Weekly Close
On a close basis, KMX, has bounced off the lower wedge boundary and is near the resistance area (magenta line).
Price action could be positively biased in the coming week as a result of ‘tax refund’ car buying (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.
Over and again, this sector (IBB, XBI) is not participating in tandem with the other major indices.
Today’s pre-market mayhem higher over supposed slower outlays of possible trade tariffs to happen some-time, some-day, caused the major indices to launch upward. 🙂
Well, everybody seemed to be blasting higher except one sector, biotech.
Wyckoff Directed Action
No matter what the ‘narrative’ may be, Wyckoff analysis directs us to look at what the market is actually doing, then interpret the action.
Early after the open, trade TZA-25-01, was exited, +8.9% gain, short position opened in biotech via LABD, Trade: LABD-25-01 (not advice, not a recommendation).
Biotech XBI, Daily
Today posted outside down, taking out both the high and low of the prior session.
Note the trading channel and width, Fibonacci 13-Days.
Also note the two ‘breakaway gaps’. The second one on January 10th, much wider than November 12th, last year.
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.
For a clue to the (potential) answer, we can look at what’s happening to Pfizer, link here and here.
However, let’s not get ourselves wrapped around the axle on events, forecast years ago.
Rather, let’s go straight to the truth, the price action and see what it’s telling us.
Moderna MRNA, Weekly
The entire move from low to highs is shown. Included on the chart, are two Fibonacci indicators.
One is the standard ‘retrace’ indicator; the other, is a ‘projection’ indicator.
The ‘projection’ is based off the ‘a-b-c’ move from the lows of November 2nd, 2023, to the highs on May 24, 2024.
The retrace and projections are hard to see, so the ‘Detail‘, arrow is where we’re headed next on the daily.
Moderna MRNA, Daily
If there ever was a chart to once-and-for-all, refute, dismiss, trash, the whole ‘Fundamentals’ argument, that earnings, interest rates or some other ‘Voodoo economics’, moves prices, this is it:
MRNA, price action hit the 23.6% retrace level (exactly) for two days before moving on to hit the 161.8%, projection (exactly) before reversing.
Note the ‘100%‘ level as well; price action confirmed this area (exactly) three times! Once on the way up and two times on the way down (third time, not shown).
A century ago, Livermore said, ‘It’s all about the numbers’.
Strategy, First
Just as Livermore was primary a strategist, so is this site’s method of analyzing the markets, i.e., Strategy, Tactics, Focus, in that order (not advice, not a recommendation).
The news has been replete with reports like this one and this one.
Another panic ahead?
Sounds like it but at least in the case of Moderna, the chart itself says (effectively):
‘There’s no money in it’.
That means, another wave like we saw several years ago, is not the most likely future event (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.
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.
Was that the day where irrefutable evidence like this is going to stick?
Price action of Biotech Sector IBB, has posted a long awaited and anticipated reversal signal (not advice, not a recommendation).
We’ll look at that below.
The IBB, Up-Thrust & Reversal
As a reminder, in Wyckoff terms, an ‘up-thrust’ is where price action struggles above known resistance for some period of time and then reverses to the downside.
In the case of IBB, that ‘struggle’ lasted an incredible seven-weeks.
Biotech IBB, Weekly
Price action attempted to break above resistance for nearly two-months, before reversing lower.
Then we had an initial test during the week of 12/23/22 (on the daily for three days), and a secondary test last week.
Biotech IBB, Daily
The daily shows more detail on the struggle.
Point No. 1, was the initial test. Point No. 2, was the secondary test which appears to have decisively failed.
Pre-market action shows IBB, set to open slightly lower.
If it does, then expectation is for some (brief) attempt to rally as a test of the breakdown.
The Driving Force
For years, this site has not wavered in the assessment, what’s happening in this sector, will be the driving force for the entire market on a go-forward basis (not advice, not a recommendation).
Anything can happen.
It’s unknown if yesterday was ‘the day’.
What is known however, evidence is building on a massive scale. Every day, sometimes multiple times a day, we see the effects.
Positioning
This site presents the data, the insight and price action nuances. It does not give recommendations.
With that said, going short this sector is not as straightforward as the other major indices.
IBB, may be shorted directly but will likely result in a maintenance fee from the broker.
Of course, that puts one on the hook for the sector’s dividend payment (currently yielding 0.31%).
The other option is 2X leveraged inverse fund BIS.
However, this fund’s volume is thin … meaning it’s not nearly as liquid as the other inverse funds such as SDS, DXD, QID, SOXS and so on.
It’s up to the trader/speculator to participate or not.
We’re about fifteen-minutes before the open. Let’s see what happens next.
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.
