Over the past seven weeks, as the biotech indexes worked their way through a corrective retrace, there were no guarantees we’d get such an obvious reversal.
A market disconnect could have happened at any time (and is still a possibility).
At this juncture with SPBIO, penetrating and rejecting a prior resistance area, we’re likely on the way to much lower levels.
The daily SPBIO is below. The next chart has it inverted with notations added:
Inverted. Notations added:
We see penetration below the blue line support area. This sets up the Wyckoff spring condition (up-thrust, non-inverted).
The last update, showed thrust energy already divergent; set for reversal.
Note:
The criminal behavior within this sector continues to mount by the day.
Operating with impunity.
When, how, or if that breaks out into the open, is the big unknown.
SPBIO, Character Change:
One of the benefits (if you can call it that) of having a position that’s eroding by the day, is that you get very intimate with the behavior of price action.
Consider it an ‘opportunity’ to focus the mind.
The typical behavior of SPBIO (and inverse LABD), is to establish the day’s trading range within the first two hours of the session.
Consider those two hours as the ‘head fake’ as that range is then eroded throughout the rest of the day.
Today’s session has been no different. A wide range established early but here’s the change; There’s been little, to no erosion.
As if on cue, during the third hour of trade, SPBIO attempted to erode the range. Inverse LABD, shown below.
However, that attempt appears to have been rejected:
As of this post, price action can’t get itself (appreciably) back into the early morning’s range. The character of the index has changed.
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.
In the entire history of the market, that’s never happened before, either.
Biotech Backdrop:
We’ve got empirical and anecdotal evidence pointing to the real objective of the ‘experiment’; now, we’re fortunate enough to have a data analyst doing what the medical establishment used to do.
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.
Sentiment can’t be seen on the chart. One can guess but it can’t be measured directly.
Sentiment change comes first.
That change in turn, results in a change of volume, i.e. ‘commitment’.
Then, after commitment dissipates, price is next.
That looks like the current situation with biotech and specifically inverse fund, LABD.
In what may be an idiot or genius move (depending on outcome), the short in biotech SPBIO (via LABD) has been maintained throughout the current down thrust; not advice, not a recommendation.
The reasons for that decision have as many layers as the proverbial onion. Not the least of which, is a market break anywhere from 20% to 50% (in our view) can happen at any moment.
‘Never happened before’, one might say.
Oil futures in their entire history have never gone negative before, either.
Bonds, in their entire history have never been shorted by four-standard deviations before, either.
A world-wide coordinated push to euthanize the entire population has never happened before, either.
Margin debt and valuations have never been higher before, either.
Underlying liquidity has never before been removed to the current extent, either.
So, we each have our own reasons.
The firm’s main account (not the Project Stimulus account) has drawn down about – 13%, on the current short position.
A core position has been maintained but small amounts have been removed and added based on price action.
When the anticipated gain, is high hundreds of percent and maybe above 1,000%, the draw down above, looks acceptable considering the (potential) opportunity.
On to the chart:
The daily chart of LABD, shows both net downward price action and thrust energy are dissipating.
Note the ‘Force Index’ scale has been accentuated to better show the divergence.
We’re looking for price to move back higher to test support/resistance areas.
If or when it does, the plan (as has been from the beginning) is to continue to add LABD until volatility makes it prohibitive.
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.
Crisis will create opportunity for leadership; at this point, there’s not much if any in the financial sector (i.e. ‘best ever’, above).
When the big melt-down hits, leadership’s not coming from the ranks of the ‘compliant’ or the enforced mediocrity of the ‘fiduciary’.
Therefore, we can all take our cue; like this Irish couple who took it upon themselves, to separate from the crowd and escape quarantine.
With that in mind, on to the markets:
Analysis, Biotech
As we head towards the close with about twenty minutes left, the S&P 500, has posted an all-time high.
Biotech, SPBIO and IBB, are still well below their highs but are nonetheless at a point of instability with today’s action.
As the Hourly chart of LABD shows, we’re at the danger point and in spring condition:
A push back into the range above support, is significantly bullish for LABD and bearish for SPBIO.
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.
For what seems the longest time, a recurring focus of this site has been the biotech sector.
Specifically, the IBB (ETF) and SPBIO (Index).
There’s good reason for that. In this update, we’ll go deeper into the downside opportunity.
Biotech Reversal:
SPBIO, topped out on February 9th this year. The IBB (ETF) topped one day later.
Both went on to form a Quarterly reversal bar; indicating a long term change in character.
Of the two, SPBIO has showed more weakness having posted monthly lower lows for three successive months.
That relative weakness over the IBB index, has resulted in focusing on the inverse of SPBIO; specifically the 3X inverse, LABD.
Working with leveraged inverse funds is only profitable on a short-term basis or when the underlying index is in a persistent down-trend.
Otherwise, typical market chop results in value erosion of the inverse fund (not advice, not a recommendation).
For the reasons discussed in the last section below (Nuremburg 2.0), we’re anticipating the index to have a sustained and persistent drop to much lower levels.
Downside Projections:
Going way back to Reminiscences of a Stock Operator and the Wyckoff Stock Market Institute training materials, both in their own way indicated a speculative position was only entered if there was sufficient potential.
Livermore’s 10-points or more and Wyckoff’s cause and effect
In Wyckoff’s case, the ’cause’ was price action congestion built up in the P&F chart.
The ‘effect’ was the resulting move.
Which brings us to now:
Many times on this site, we’ve said biotech has built up congestion in a way, when it reverses and begins its decline, price action itself will create lower targets.
We’ll present two charts showing how that’s happening.
The first P&F chart in this update and provided below, has a projected downside target for IBB around, 116 – 120 area:
Note, the downside is not to scale as the real location is far below the noted area.
Biotech IBB, then went on to post lower action. That in turn has resulted in an updated downside target:
Once again, the downside is not to scale.
It’s apparent, as IBB heads lower, it successively builds lower targets and it’s only (potentially) just getting started.
The weekly chart of IBB below, spells it out:
If and when IBB price action gets to the initial targets, it enters a congestion area that will (by that time) be over seven years wide.
If the trend is still down, that congestion in turn would target even lower levels.
The “-80%” interestingly enough, comes from a quote by Steven Van Metre at this link.
That 80% drop also corresponds to a downside Fibonacci (not shown) projection of 423.6%, on the above chart.
Nuremberg 2.0
This phrase has become so ubiquitous you can do a search for it.
So far, not a single mainstream financial site or YouTuber (still on that platform) has mentioned this fact in their analysis.
The speck injections are mass genocide and intended as such.
Two recent events resulting from injections are here and here.
If all of a sudden, injected pilots can’t fly (the first link), how are goods going to be transported?
Not generally known to the public, commercial air-transport is also used to haul freight (while carrying passengers).
Exactly how all of this (world crime) will break is unknown.
If and when it does, the result in the biotech sector as well as equities in general, could be successive air-pockets all the way down.
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.
Several times in these updates the word ‘collapse’ has been used to describe the potential for biotech.
The monthly chart below shows a Fibonacci projection based off current price action.
Note how projected levels match up with support and resistance areas:
Obvioulsy, this is a long term projection.
It may work out the short position in biotech via LABD, (not advice not a recommendation) will have to be exited and re-entered several or many times if/when the sector heads for the bottom.
Stay Tuned
Bonus:
The hourly chart of IBB below, shows Wednesday’s price action touching, then bouncing off the first Fibonacci projection.
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.
LABD inverse fund (3X inverse SPBIO), marked with time pivots and potential channel.
The plus or minus one-day on the Fibonacci counts, is well within acceptable limits.
There’s been so much focus on biotech because of the opportunity.
Trading congestion equals directional potential.
A good way to show that (downside) potential, is with the P&F chart of biotech IBB, below:
The initial projection targets the 120-area which is below the support levels at, 143 – 145. If penetrated, those support levels would likely become resistance to any upward retrace.
We’re about an hour to go before the regular open. LABD is trading flat to slightly higher.
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.
In a situation that’s straight out of any typical trading text: ‘When a market goes into a throw-over and then enters back into the range, it’s a classical analysis sell signal’ (not advice, not a recommendation).
That’s where Moderna (MRNA) is now.
Moderna’s the ‘chief cook and bottle washer‘ for the world-wide kabuki theater. So, we’re using it as a proxy for the biotech sector as a whole.
Separately, biotech index IBB, is retracing but has not posted a new daily low.
Inverse SPBIO fund LABD, has formed an hourly reversal bar and looks to be forming a daily reversal bar. As of this update, it has yet to post a new daily high.
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.
Being inverse leveraged 3 to 1, this vehicle is amplified; sector changes in character can be picked up earlier.
What’s clear is the net distance traveled by downward thrusts is narrowing … down to nothing.
It could be a pause before heading lower or it could be that downward action is exhausted.
As we head into the close, price action can be seen slightly retracing upward.
We won’t know if that’s all for the downside until LABD posts another (new) daily high.
Analysis Tip:
LABD made a new daily low during this session.
The interesting part; it had to post a new daily high (above yesterday’s high) to get to that low.
That’s the only way it could get enough fuel (i.e. create price instability) to push just 0.08-points lower … potentially signaling final exhaustion.
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.
Looking at the weekly close chart, we can see the wide range.
In addition, there’s a significant bullish divergence that (technically) gives the dollar, UUP, enough energy to test the top of that range; a potential that’s completely opposite the current narrative.
A this juncture, silver, gold and the miners are still correlated.
Yesterday, a potential top and reversal in miners GDX, was identified. Today, it appears to be hovering and looking unsure of its direction.
GDX has not posted a new daily high or low as of this update.
A sustained dollar rally (along with the bond market?) would be unexpected given what seems to be apoplectic hyperinflation ranting.
Separately, in biotech, the market (IBB) has stalled to the upside in a higher than expected test. Inverse fund LABD, made a new daily low and it too, has stalled.
Downward thrust energy on LABD is dissipating.
Technical update for biotech, planned for tomorrow … market permitting.
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® 