One by one, each sector appears to be topping or reversing.
This time, it’s biotech.
Analysis (and action) over the past year has been on again, off again and now, appears to be back on again.
However, this time we have (as we’ll see below) a near perfect Fibonacci correlation.
Biotech Sector Index SPBIO, Daily
First, the big picture.
The corrective retrace that started way back in late October, of last year.
Next, we’ll get in closer to show the exactness of the Fibonacci levels.
It hardly ever works out this perfectly, but there it is.
Change Horses?
It’s no secret, the focus of trading action on this site since mid-October, has been to short semiconductors, potentially the largest bubble (A.I.) in world history (not advice, not a recommendation).
However, biotech may get its comeuppance as well with information like this, this and this hitting the mainstream.
The decision to take action or not, remains open (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.
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.
As said in this update, the historic short-squeeze, while damaging to account P/L, was a huge public service.
This chart confirms the majority of short-positions have evaporated. Meaning, the potential fuel for relentless upside (from those shorts), is no longer there.
That fact is being mirrored in price action as we speak.
As covered above, two markets are hanging by a thread: biotech and real estate.
Both are bubbles on a world-wide scale, but biotech is the one that may affect all others.
Biotech SPBIO, Inverse LABD
As this post was being created, biotech leveraged inverse fund LABD, has just printed (as of 12:40 p.m., EST) outside-up; also known as a ‘key reversal’.
The daily chart is below.
LABD, Daily
To make it an official outside up, price action will need to close above yesterday’s close (LABD: 17.87).
We’ve already shown that SPBIO, price action has formed a huge bear flag lasting more than eight weeks.
Action from the past three days can be considered a Wyckoff up-thrust as well.
Now, we have a potential key reversal.
If so, this market may be in serious downside trouble.
Positions: (courtesy only, not advice).
Yesterday, JDST-22-05, was exited at 9.0341, with a loss of – 1.45%, so that focus (and capital) could be directed to biotech, SPBIO and inverse LABD (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.
The Danger Point® 