The October 4th, update proposed a top and reversal for Biotech (IBB) at or near the election.  November, 2^nd , or 3^rd, could be new highs followed by an immediate reversal.

Fibonacci week 34, from the 3/16/20 lows, is the week ending on Friday, November 6^th.

The daily chart (below) has a trend that’s been confirmed; If it remains intact for the next three weeks, it will lead us straight to new highs at the beginning of November.

Following price action in this way allows for preparation. 

Timing, position size and stop levels can be (and must be) planned in advance. Not a recommendation, not financial advice.

The topping formation in biotech has been followed and traded (via BIS and LABD) by this firm since early June. 

Doing so, forces one to be accustomed to the behavior of the sector. 

Behaviors such as counter trend action in IBB, tends to be complete and resume original trend, right around the 10:00 a.m. to 10:30 a.m. time-frame.

That’s a data nugget that can’t be obtained by parachuting into a sector, taking a position and hoping it all works out.

A perfect (short) trade set-up would be for price to gap-higher into the 2nd, or 3rd (November) and allow for an entry with a well defined stop … such as the top of the gap-bar.

Of course, at the open this Monday, IBB could break the trend-line and create an alternate scenario … anything can happen.

However, at this point, probabilities and momentum (although waning) favor continuation upward.

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.

Getting out of a non-performing position allows the mind to clear.

What we see now, is a massive terminating wedge pattern for IBB. 

That wedge had a trend line break September 3^rd, on decisive volume.

The break is now being tested.  This is typical market behavior. Expandable chart of IBB, is here

It’s about thirty minutes before the open and pre-market activity shows IBB trading higher. 

The IBB, 50% retrace level is approximately ~ 136.20

IBB tends to move counter-trend during the first two hours of trade. 

If the trend is down and the market’s just testing, the (continuation) reversal lower may come around 11:30 a.m. EST.

Inverse funds (not advice, not a recommendation) are BIS (2X-inverse) and LABD (3X-inverse).

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.