As we’ll see below, SPBIO, has oscillated itself into a decision point.
From a positioning standpoint, my firm has taken a bearish stance on biotech via LABD (not advice, not a recommendation).
Yesterday’s update anticipated more SPBIO, downside which did not happen.
Instead, we got a test of the latest SPBIO, high.
This testing action does not negate the short via LABD, but it’s now very close.
Once again, we’ll use an inverted chart of SPBIO to mimic the action of leveraged inverse fund LABD.
Biotech SPBIO, Hourly (Inverted)
The blue lines are subdivisions higher and the magenta, subdivisions lower.
The zoom chart below shows just how close we’re to short-set-up, exit. If SPBIO posts a new daily high, by definition it will push past the LABD, stop and the trade will close (not advice, not a recommendation).
Strictly speaking, in the chart above, the ‘risk’, is the distance between the latest hourly low for SPBIO (Inverted) and the stop location at the black arrow.
That’s approximately 50-pts on the SPBIO, chart which corresponds to about 0.43pts for LABD.
After hours action (5:57 p.m., EST) has LABD, trading lower -0.37pts, or -1.68%, @ 21.68, but still above the prior stop location @ LABD 21.23.
We’re going to use the chart from yesterday’s post to set the stage for getting closer-in.
This past Friday’s early morning ‘spike’ is barely visible; the 30-minute (inverted) chart below, has more detail.
SPBIO, 30-minute (Inverted)
Price action rejected the lower levels (higher on SPBIO) and pulled away throughout the session. That ‘pulling away’ continued on, all the way into the close.
That’s a clue there may be follow-through at the next session.
If the early session opens ‘gap-higher’ (SPBIO, lower), into the resistance area (four magenta arrows, hourly chart), it would be the fourth time pressuring at this area; markets rarely hold a fourth attempt.
Of course, other markets are being watched like real estate (IYR), Tesla (TSLA), and even Basic Materials (DJUSBM), a potential sleeper for significant downside.
Updates are planned if/when low risk shows up.
Positions: Current Stance (courtesy only, not advice).
The following is the positioning of my firm’s main (largest) account.