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
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.
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.
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’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.
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.
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.
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.
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).
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.
The ‘Epsilon’ variant (from the idiot in Brave New World) is probably being saved for last … because if anyone’s still believing the hype by that time, it won’t matter … they’ll be fully ‘boosted’.
That doesn’t mean the pros can’t make money off the herd … while there still is a herd.
Which brings us to today’s underside test action of MRNA.
It’s true that price action is testing the underside.
However, if we go to the daily chart (below), we can see if price action can make it just a bit higher … to the 360 – 380 area, then we have an up-thrust (potential reversal) condition.
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 months, the biotech SPBIO and its leveraged inverse fund LABD have shown a repeating trendline characteristic.
This time around, the two right-side trend contact points (shown above) are LABD’s (Day 34) outside up reversal and today’s Fed minutes release, reversal.
The chart below is a compressed version of LABD. It gives a better perspective on the gain potential.
Looking at the chart it’s clear why so much focus has been placed on strategically shorting biotech (not advice, not a recommendation).
If there’s a decisive SPBIO break lower, the gain potential for inverse LABD is significant.
Time frame for exit (not advice, not a recommendation) unless price action dictates otherwise, is still planned for mid-October.
Stay Tuned
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.
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.
Fall and Winter are very close now. As this interview with Stew Peters reveals, Fall and Winter are when we get the real picture of ‘side effects’.
Biotech is ahead of the pack on the downside and for good reason.
Positioning:
Positions have not changed except for additions of LABD as SPBIO declines and LABD heads higher (not advice, not a recommendation).
As a reminder, this site’s not interested in day trading or even swing trading unless that’s all the market offers.
No, we’re interested in positioning strategically.
This type of trading is modeled after the host’s twenty-four years of experience with aircraft flight test and certification.
A typical project would take five to seven years to complete; have a near infinite number of complex stages along the way with each one a profession unto itself.
At this juncture, biotech may be poised for the largest implosion ever seen in market history.
Stay Tuned
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.
I’ve never seen such an on-going event result in so many people using Biblical standards to ether describe the battle, or to say this could be it. We need to keep our lampstands ready.
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® 