‘Sitting Tight’

12:32 p.m., EST

Livermore: ‘Get right and sit tight’

Inverse biotech fund LABD, in trading channel

A steady sustained decline of tracking index SPBIO, is the best environment for highly leveraged (3X-inverse) fund LABD.

Biotech continues to be one of, if not the downside leader.

There has been no major break lower (LABD higher) that would draw attention to the index. That’s good in a way; it allows one to open positions (not advice, not a recommendation) while price action is relatively quiet.

It’s still a while before the close. LABD could even finish slightly lower and remain in the trading channel shown above.

Self-Employment Is Key:

It’s stories like this that highlight one way (if not the only way) to avoid being sucked into the first round of injections is to generate your own income.

It seems that everyone jumps on the bandwagon and tells us ‘how bad it is’ … very few do the work and show what can be done about the current reality.

From a financial market perspective, shorting biotech looks like the highest probability set-up (not advice not a recommendation) until such time that price action says ‘get out’.

So, that’s this site’s approach to generating income and being separate from any large (mandate enforcing) corporation.

‘Knock and Talk’

One last note on taking action. This is an example; offering a perspective on what can be done if there is a knock at the door.

Narrow your focus of ‘influencers’ to those who actually provide a service. Reduce or eliminate exposure to those who continue to peddle the fear without any kind of plan.

Stay Tuned

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.

Market Summary

Dow, S&P, Russell … all outside down

Three markets with key reversals and the biotech sector (SPBIO) posting an inside day.

One other (less followed) market of note with outside down, was basic materials (DJUSBM).

Gold’s (GLD) upward thrust from Thursday the 29th, continues to erode.

One gets the sense that it’s slipping away for the bulls.

SPBIO price action shows the most probable direction is lower.

Expectation for the next session, is for some kind of downside follow-through along with lower market action overall.

Positions:

Current positioning remains unchanged (not advice, not a recommendation) being short the biotech sector via LABD.

Market updates for the week will be limited (as the result of travel) and will resume with technical discussions by the week-end.

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.

Biotech Reversal, Repeating Trend

9:45 a.m, EST

Price action itself defines the trend

The unmarked hourly chart (above) of inverse fund LABD, shows the location of the last update.

That update called for LABD to reverse higher; based on thrust action of the market itself.

Soon after (magenta arrow), LABD pivoted higher.

The right side action has a familiar repeating trend:

The chart below is a compressed version.

The repeating lines have been added. Arrows show contact points:

Strictly as a courtesy, daily chart of LABD is below with notations of buy and sell (not advice, not a recommendation) for my firm’s main account.

A good many that monitor this site have probably become bored with biotech … just as they did with Steven Van Metre’s analysis of bonds (back at the lows).

Van Metre is providing an excellent service. True, he probably has people moving their accounts to him. He’s running a business after all.

However, that does not negate the fact, he’s one of, if not the only one saying that we’re about to enter a deflationary environment (if not just temporally); complete opposite the conformist (and media led) crowd of hyper-inflationists.

Even Johnny Bravo has said, ‘hyper-inflation will come … but when?’

Summary:

The short positioning in biotech (via LABD) continues: Not advice, not a recommendation.

Rumors are swirling now about power outages and cyber attacks with major corporation website shut-downs.

Does anyone really want be to playing around with long positions when torpedoes (to hit the market) are already in the water?

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.

Building The Case For Collapse

2:46 p.m., EST

Biotech SPBIO, Down

Inverse LABD, Up

Inverse biotech, LABD above, is confirming a pivot.

The magenta arrows show contact points morphing into a pivot that has two more contacts.

The new trendline was copied, then pasted to the far left of the chart.

It’s clear the new (pivot) trend is identical to the one created when LABD bottomed out this past February.

While the overall markets (S&P, Dow, COMPX) are still showing green, biotech looks like it has started the next leg down.

The original short position via LABD, has remained intact (not advice, not a recommendation) and has been increased five times (including today) since the beginning of this month.

In our view, biotech’s signaling the potential for a very dangerous situation.

Biotech’s headed down and we’re already short; not advice, not a recommendation..

As Livermore said a hundred years ago, ‘surprises tend to happen in the direction of trend.’

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.

‘Greed is Good’

11:53 a.m., EST

Old Fashioned Greed Saves The Day?

After BA pilot fatalities were confirmed, at least one airline is backing off from insisting their pilots are injected.

Some adverse reactions linked above, occurred in-flight; the pilot was incapacitated.

“Is there a pilot on-board?”

That could become a frequent call through the cabin intercom in the months … even years to come.

The bottom line implications are obvious.

The response to ‘back-off’ probably has nothing to do with safety and more to do with protecting those executive stock options.

Which brings us to the markets.

Analysis: SPBIO (LABD)

The last update for biotech said it was ‘about to get real’. So, it has.

Looking at SPBIO inverse fund LABD, we have the familiar trend lines:

The market itself says it wants to follow this trend.

Pulling out to the weekly, we get what seems to be an incredible picture.

At the beginning of the trade, the short position in SPBIO, via LABD (not advice, not a recommendation), had an exit time-frame during the second, or third week of October.

From an empirical and seasonal standpoint, that’s when on-going downtrends tend to reach their lows.

Already Baked In:

Various numbers are bandied about as to how many have been injected.

One estimate is 2-Billion, world-wide (Dr. Coleman if memory serves).

Total population at 7.9-Billion; 2-Billion, equates roughly to 25%

No matter what happens, de-population is already baked-in.

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.

Biotech: Technical Force

2:46 p.m., EST

LABD, Force Index Divergence

Sentiment, Volume, Price

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.

Lower, Lower … Weaker, Weaker

6:37 p.m., EST

Inverse biotech LABD, closes lower (again).

All is not what is seems.

Down-thrust energy diverging.

The daily close of LABD, shows price action has penetrated another (lower) support level.

Close below support on the weakest down-thrust energy (and lowest volume) since LABD, started its corrective move on May 14th.

Everyone has their own preferred time-frame. Ours is probably longer than most.

If there’s going to be a meltdown in biotech or some kind of serious correction lower, a likely bottom for a sustained move (as said before) will be where they usually are … the third week of October.

Price action is the final arbiter. However, it (SPBIO) has not (yet) indicated it’s on a new bull run to new highs.

At this point, the market’s frustrating both longs and shorts … and doing a good job of it as well.

Our short position via LABD, is being maintained … but the finger is edging closer to the sell button; not advice, not a recommendation.

Stay Tuned

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.

AMGN, Gap Filled

Price action pushed past yesterday’s analysis to fill a price gap from February.

What’s next is the question.

The answer may be in the pre-market, where AMGN is down -1.25% and inverse fund LABD is up +4.7%

If biotech IBB pushes below yesterday’s low of 154.45, we’ve got tentative confirmation the reversal (which tested its highs yesterday) is going to continue.

We remain short this sector via LABD (not advice, not a recommendation) with a hard stop @ 17.80

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.

Biotech 50% Retrace

Biotech pulls back 50% and the bulls look tired.

Update 12:23 p.m. EST, noted below in red

The 15-minute chart of inverse fund LABD shows how successive moves lower (higher for IBB) have covered less distance.

It’s very early in the session and price action at this moment is fighting it out at LABD 18.00, area.

We’ve maintained our short position (not advice, not a recommendation) but have the sense, if there’s not a reversal at this point, IBB could be working up for new all time highs.

This is the danger point.

Current LABD low for the early session is 17.91 … a good place for a stop.

LABD pushed down to 17.80, early in the session before reversing.

It has just passed 18.28, a new hourly high. AMGN to be covered later, at important inflection point (down).

Short position via LABD maintained (not advice, not a recommendation), hard stop at 17.80

With markets at record prices, Fed announcement tomorrow, no more stimulus (likely), forbearance to end, possibility of the ‘speck’ blowing wide open, one gets the sense this may be an important reversal.

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.

High Yield, The Canary

The canary in the coal mine could be High Yield, HYG

Since early last year, this site has been discussing growing parallels of the current market environment to that of August 1987.

Just recently, ZeroHedge began to pick up on the idea as well.

What’s becoming very obvious when looking at 1987, we’re in something much larger; possibly an order of magnitude (or two) larger.

Here’s the latest from Jeramiah Babe. Important time-stamps below:

2:15, Crypto (try it when the power goes out)

3:00, Inflation

3:30, Agricultural prices

3:40, Lumber prices

4:10, Middle Class destruction

5:00, Last longer than Great Depression

7:30, Dramatic shift (never to be the same)

10:00, “We’re in 2021 now. Anything is possible

A quick review of longer term momentum indicators on the major indices (or ETFs), below:

Technology based indices all have significant downside momentum.

The financial press may have pawned this off as ‘rotation’. Of course, that remains to be seen.

Our view, high yield tells us something much larger than a sector rotation’s occurring.

It’s possible, the most debt (interest rate) sensitive indices are reversing first which could be a sustained, long term reversal.

The HYG weekly chart pattern is similar to the prior reversal (magenta ovals). This time however, MACD has spent over nine-months in a divergence and has crossed to the downside.

There could be a new high … low probability but it could happen (after all, it’s at support). If it does, weekly MACD may post an even larger divergence.

In response to the HYG reversal, we’re watching (and are short) the biotech sector, IBB (not advice, not a recommendation)

Of the three noted above with negative momentum, IBB is the weakest. Last Friday’s action has tentatively confirmed the resistance areas and trading channel reviewed in this update.

Friday’s IBB lower action was nearly imperceptible but it was there. Major reversals can happen this way … a little at first.

Wyckoff said it in 1910, ‘It’s as if the weight of a feather can determine the next direction’.

We’ll see if there’s follow-through to the downside on Monday.

Stay Tuned

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.