Biotech Forecast … Pivot or Not

Multiple Scenarios, Going Forward

The ability to see multiple scenarios is like a Rorschach Test.

With each additional tick on the chart, it takes on a different character.

So, let’s look at what’s most likely, based on where we are now with one of, if not the weakest sectors; biotech SPBIO.

For reference, we’ll start with the big picture … the weekly chart to show the two-month long, bear flag.

Biotech SPBIO, Weekly

Next, is the daily for the past several months.

We’re at The Danger Point®; the test, where there’s not much distance between pass and fail.

Price action can (easily) go either way.

SPBIO, Daily

However, from a probability standpoint, we’ve been in a bear flag for months; the expectation is the test will pass, price action reverses and we get a downside breakout.

The hourly chart has the most likely potential outcome.

Pre-market action shows flat (as of 9:08 a.m., EST).

SPBIO, Hourly

The chart has two likely scenarios: one pass, one fail.

A less likely outcome is a straight up launch above resistance.

However, anything can happen.

Summary

With the Fed out talking hawkish again, we’ll say it again; there is no ‘pivot’.

Whether or not the press is intentionally miss-directing the narrative, in a sense, does not matter.

We’re looking at the price action.

Right now, it says, we’re at a dangerous spot and may be about to pivot (pun intended) to the downside.

Positioning

Not advice, not a recommendation.

No change since yesterday.

Short position in SPBIO via LABD; details are as follows:

LABD-22-13:

Entry @ 18.72: Stop @ TBD

Note: Positions may be increased, decreased, entered, or exited at any time.

***, Indicates change

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.

The Danger Point®, trade mark: No. 6,505,279

Can It Get Any More Dangerous ?

Testing The Reversals

First, some housekeeping.

This morning’s action in biotech SPBIO, forced exit of LABD-22-12, with a minimal loss of -0.12% (not advice, not a recommendation)

There was a bounce off SPBIO, resistance in the early session and then, it became clear the market was setting up to penetrate that resistance.

As the Fed announcement progressed, SPBIO, indeed moved up sharply.

Reversal Set-Up

By definition, such action puts SPBIO, in a test of a prior Up-Thrust (reversal) from 11/11/22 – 11/15/22.

Conversely, it puts the leveraged inverse fund LABD, in a test of a Spring set-up during the same period.

You can already see where this is going.

The work has been done on a fundamental basis as well as technical; biotech is set for significant downside.

Whether or not, we’re at that inflection point right now, is unknown.

Biotech 3X Leveraged Inverse LABD, Daily

Looking at the mark-up below, we’ve had a spring set-up; then, sign of demand with action moving higher and finally today, a test of that spring set-up.

David Weis used to call such drastic moves a ‘gut-check’, to see if you can hang on (not advice, not a recommendation).

Price action has come right back to support with a wide bar and high volume.

Such bars increase the probability of a counter move to test which in this case, is a move higher.

Summary

Remember, all this action’s occurring ‘within’, the SPBIO, bear flag that’s formed over two-plus months.

It seems like a huge understatement to say this market and the main indices, are in a dangerous position.

Positioning

Not advice, not a recommendation.

Like a Terrier on a Mailman’s leg, we’re not giving up on biotech’s potential downside … at least not yet.

Short position in SPBIO via LABD; details are as follows:

LABD-22-13***:

Entry @ 18.72***: Stop @ TBD***

Note: Positions may be increased, decreased, entered, or exited at any time.

***, Indicates change

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.

The Danger Point®, trade mark: No. 6,505,279

Pandora & Twitter, The Box Opens

Fuel, For The Downside

With Twitter’s lifting of the ban on truth, linked here, we may be entering the next phase of collapse.

Whether or not it’s going to immediately show up in market price action, is unknown at this point.

Nascent Reversal?

The last update identified the markets were poised for potential reversal.

Two days later and we’re mostly down; that’s in spite of the supposed positive ‘machine’ bias as presented at this link.

A positive machine-market could still happen (data released tomorrow) but for now, price action itself, is posting lower; this is the crux of Wyckoff analysis … ‘What is the market saying about itself’.

In line with the truth being let out, not surprisingly, chief cook and bottle washer, biotech, is having a rough time.

Biotech Bear Market

Prior posts have documented the bear flag that’s been forming for over nine-weeks. Now, we have an apparent coiled action, ready for the downside.

Since we’re short this sector via LABD (not advice, not a recommendation), we’re going to look at LABD, to identify the potential.

SPBIO, 3X Leveraged Inverse, LABD

We have three charts, all depicting daily action.

The first (un-marked) chart is close-in and it looks like a mess. That is, until you put in trend lines and a Fibonacci count as shown on the second chart.

Adding the mark-up.

Then, keeping those trend lines intact, pulling farther out, we see the potential if there’s a sustained move.

Price action has been trading in a tight range over the past eight-days. Let’s see what happens next.

Positioning

Not advice, not a recommendation.

Short position in SPBIO via LABD; details are as follows:

LABD-22-12:

Entry @ 19.9194, 20.91***: Stop @ 19.28***

Note: Positions may be increased, decreased, entered, or exited at any time.

***, Indicates change

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.

The Danger Point®, trade mark: No. 6,505,279

Bond Market, Signals Trouble

It’s Not About The Fed

The potential for a sustainable bond reversal was identified way back in mid-October.

Now, over a month later with bonds moving decisively higher, the ‘narratives‘ are out in force.

Those narratives revolve around ‘pivot me this, or ‘pivot me that‘, or an infinite number of the same variations.

The reality is, there’s not going to be any ‘pivot’.

Even if there was, as Michael Cowan reported weeks ago, the market keeps crashing anyway (not advice, not a recommendation).

With that in mind, a popular narrative is that bonds are higher because the Fed will lower rates when they see we’re in a ‘recession’.

Well, they won’t ever see a recession because we’ve skipped that part; going straight to collapse and economic depression. 🙂

Of course, as Jerimiah Babe puts it, Americans won’t do a thing to get ready until the last minute … most likely after the market is down 50%, or more.

Instead of the placating, proletariat calming narrative, it’s a recession; maybe bonds are moving in response to those in the know … something much worse may be ahead.

Could bonds be signaling, we’re close to a market rout?

Bonds, TLT, Weekly

We’re going to start with the original analysis, showing the potential for a sustained reversal.

From the October 16th, post.

A month or so, later.

As with the dollar analysis from years ago, a weekly bullish divergence as we see here, may result in a rally that lasts longer and goes farther than anyone expects.

Of course, the real question is ‘what does it mean?’

As Wyckoff said over a century ago, we won’t know the full reason for a move until it’s over.

One view of it however, different from the accepted narrative, we could be headed for some kind of disconnect; those in the know are shifting to ‘relative’ stability.

Moving on to other markets, we have the following:

Positioning

Not advice, not a recommendation.

The push higher in biotech SPBIO, discussed in the prior update did not materialize.

Instead, we got a new daily low, followed by some upward testing action.

A day-trade in LABD was opened and closed; then near the market close, opened again.

Details are as follows

LABD-22-12:

Entry @ 19.9134***: Stop @ 19.10***

Note: Positions may be increased, decreased, entered, or exited at any time.

***, Indicates change

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.

The Danger Point®, trade mark: No. 6,505,279

Set For ‘Implosion’ … Biotech

IBB & SPBIO, at The Danger Point®

Each one in their own way, as we’ll see below.

From a Wyckoff standpoint, we’ve identified one of, if not the sector(s) most likely to decline the farthest and fastest in a bear market.

Without question, biotech contains the overriding ‘elephant’ that’s literally affecting everything else on the planet (not advice, not a recommendation).

As stated in the tag-line above, the two indices in question are IBB (large cap) and SPBIO (small cap).

IBB, has Amgen, Gilead and Vertex, as the top three while SPBIO, has more speculative (i.e., losing more money) Beam, Twist and Fate.

Index IBB has $342.8-Bil, combined for the top three while SPBIO has only $6.5-Bil, combined.

So, it makes sense the more speculative ‘cash burning inferno‘ TWST, is in the SPBIO. 🙂

On to the charts

IBB Weekly

IBB has formed a decisive resistance area as shown.

The fourth attempt which pushed above the prior three levels (and retraced), puts IBB, at The Danger Point®

Next up is the SPBIO.

It’s much weaker and thus the focus for any short opportunities (not advice, not a recommendation).

SPBIO ($SPSIBI), Weekly

While IBB, has moved higher, to an up-thrust over the past nine weeks, SPBIO during that time, has languished.

Note: The chart scales are identical. Scrolling up and down, one can visually see the weakness of SPBIO.

SPBIO, also reached all-time highs, six months before IBB.

Getting Closer-In: SPBIO

We’re going to look at the hourly chart.

SPBIO, Hourly

Those who are long-time visitors to this site will instantly recognize the set-up: ‘Spring-to-Up-Thrust

This Friday, tomorrow, is a shortened trading day.

There’s a potential we’ll have a small blip higher into the up-thrust zone.

Conversely, for 3X Leveraged Inverse Fund LABD, the potential is for a temporary move lower.

Leveraged Inverse LABD, Hourly

This is how it looks for LABD.

Note for the inverse fund, the ‘spring’ on SPBIO, becomes the ‘up-thrust’ on LABD.

Positioning

Not advice, not a recommendation

Wednesday’s downside action in LABD, resulted in the LABD-22-10, position being stopped out with an overall gain around 7.12%.

There have already been several disruptions to the company’s trading platform and data line over the past month and we’ve not even got started with market chaos.

Recall that just recently, the Canadian market went off-line for several hours. We should consider these events the ‘norm’, on a go-forward basis.

As a result, a standing order (in the market) is in place to go long LABD (short SPBIO) at the execution price of LABD @ 18.62.

That order may or may not be modified as we go into the open tomorrow morning.

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.

The Danger Point®, trade mark: No. 6,505,279

S&P, Opens Gap-Down

Upside Fuel, Exhausted?

Are we starting the next leg down?

Yesterday’s post, had this to say:

“SPY has yet to post a new daily low (below SPY, 394.49). If or when it does, that’s just one more addition to the bearish scenario.”

This morning’s open, puts the SPY below that 394.49, level and potentially confirms an up-thrust reversal as well as downtrend contact (shown below).

However, let’s not get ahead of ourselves as the first order of business, especially with the S&P (SPY), is an attempt to close this morning’s gap.

While that’s happening, let’s look at the charts.

S&P 500, SPY, Daily

Looking at the wider timeframe, first.

Now, let’s get closer-in.

As this post is being created, SPY is attempting to close the opening gap as expected.

Confusion Rules

As posted earlier, events are accelerating to the downside.

Supporting that assessment, we have this just out on the Crypto carnage; then on the flipside, we have this report, pointing to more upside.

Meanwhile, biotech pivots lower.

Part of the objective of these posts is to document the procedure (Wyckoff analysis) being used to select the market(s) most susceptible for a significant decline.

With that, it’s been on again off again with biotech for most of this year.

However, it looks like we’re now, at another (possibly, final?) pivot point lower.

Positions: (courtesy only, not advice).

The biotech short is being built in real time (not advice, not a recommendation).

LABD-22-10:

Entry @ 18.1398, 17.565, 17.65, 18.1594, 19.2792***: Stop @ 17.84***

***, Indicates change

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.

The Danger Point®, trade mark: No. 6,505,279

December Crash of 1899

123-Year Anniversary, Coming Up

It’s happened, before …

Even so, unless you knew it (and the exact date), finding information is difficult to near impossible.

A once free access to the New York Times article from December 19th, 1899, is now subscription based, link here.

Another link here, shows that December 19th, is not available for browsing.

Going to the site-map for that date, the crash is not at the top as one would expect.

It’s much farther down, buried in the list.

‘The worst day-panic, The Street has ever known’

Of course, in the NYT article, J.P. Morgan himself, is ‘credited’ with saving the market from further decline.

You have to laugh.

It’s just like an Arizona mid-term election. 🙂

Lastly, using the way-back machine, here’s an article from the Seattle Times, written in December 1999. It compares the situation (then) to a century earlier.

On Track For Another?

Obviously, that can’t be known until if/when, it happens.

However, we can look at the most watched market, the S&P, and see what it says.

S&P 500, SPY, Daily

We’re leaving in the moving averages to show, at least from the 200-Day perspective, the downtrend is still intact.

Other items to note:

The market is still sub-dividing lower, lower highs, lower lows. Price action’s retraced to a Fibonacci 38% (shown below), and is also in Wyckoff up-thrust (reversal) position.

We’ll get closer-in with the details.

Moving averages have been removed for clarity.

The blue line is the resistance and up-thrust area. Price action clearly above and apparently, hesitating.

Dashed grey line is the Fibonacci 38% retrace from all-time highs (1/4/22), to the most recent lows set on 10/13/22.

Zooming back out, is the scariest part of this chart.

There’s no doubt; we’ve had at least two repeating trendlines. A third could make it a trading channel.

Summary

As of this post (11:28 a.m., EST), SPY has yet to post a new daily low (below SPY, 394.49). If or when it does, that’s just one more addition to the bearish scenario.

Positions: (courtesy only, not advice).

The focus is on biotech; uniquely positioned as the weakest of all the major indices (not advice, not a recommendation).

LABD-22-10:

Entry @ 18.1398, 17.565, 17.65, 18.1594***: Stop @ 16.29***

***, Indicates change

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.

The Danger Point®, trade mark: No. 6,505,279

The Dominos Fall …

Cash Crunch, Layoffs & Bankruptcy

So, here we are.

Crypto FTX implodes, Amazon to lay-off 10,000, Health system(s) in cash crunch, solar farm Toucan Energy, goes bankrupt.

But wait, it gets better; Pfizer and Moderna, are going to investigate themselves.

All of this, just within the past few days.

At this point, it should be clear to all paying attention, we’re accelerating to the downside … at least in economic terms.

Market Disconnect

Yet, the markets appear to never-mind … going about their (manipulated) business as if nothing’s happening.

Walmart has even announced they are going to buy-back their own stock to the tune of $20-Billion.

Maybe, they’ll do it. Maybe, they won’t.

They fully admit (in the press release), the buy-back announcement, was to make sure the earnings report was ‘well received’.

The Next ‘Shoe’

Those of us ‘awake’, are collectively attempting to plan and position for the next shoe to drop.

We’ve got the usual suspects such as real estate and biotech; however, this link to The Burning Platform, could provide more potential catalysts.

Either way, disconnected market or not, one has the feeling it’s just a matter of time.

Life After The ‘Short Squeeze’

‘The shorts were carried out on stretchers’.

Well, yes and no.

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).

LABD-22-10:

Entry @ 18.1398, 17.565***, 17.65***: Stop @ 16.29***

***, Indicates change

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.

The Danger Point®, trade mark: No. 6,505,279

The Market Set-Up … This Week

What To Watch … Crypto Collapse, Biotech, Gold, Telsa

JPMorgan … says sell

Goldman … says buy.

Wyckoff says … Don’t listen to either.

In fact, Wyckoff’s stock market training course, first published in 1934, (still available), says that until you can ignore the financial press completely, ‘You will never be successful in the markets’.

Price action itself, properly interpreted, will tell you where to look for the opportunity.

The Ponzi Implosion, Cometh

The market is littered with Ponzi schemes. Some have already imploded, CVNA, HOOD, Crypto; some have not.

Concerning Crypto, here’s an excellent update from Michael Cowan. Buried in that update, at time stamp 4:58, looks like HOOD, may be in even more trouble.

Biotech is in a class of its own and was discussed in yesterday’s update.

For gold, we’re going to look at the Junior Miners GDXJ, and last week’s action.

Junior Miners GDXJ, Daily Close

The Junior’s are the weakest in the sector; therefore, that’s where we look for a short opportunity (not advice, not a recommendation).

To move higher, above resistance, normal market behavior, is to come back to the lower blue line (i.e., support) to gain enough energy to move higher for a breakout.

To move lower, normal market behavior, is to come down to the lower blue line as a test which subsequently fails; the move continues lower.

Either way, normal behavior at this juncture, is to move lower. We’ll see.

Now on to the chief cook and bottle washer … Tesla.

Tesla (TSLA), At The Edge

For starters, let’s recognize there’re a lot of moving parts; U.S. ‘parts’ and China ‘parts’.

If one’s going short, another task is to forecast under what conditions a short would have enough risk removed.

For that answer, oddly enough, we go to gold, GLD.

Gold GLD, Weekly: 2015 – 2017

GLD posted a massive upthrust above the blue line lasting over fourteen weeks before breaking decisively lower.

Then, it labored four weeks to come back up for a test.

After that, collapse; lower weekly closes for seven consecutive weeks.

In the chart above, the area identified as ‘Short’, has as much upside risk removed as possible, right at resistance.

Now on to Tesla.

Tesla TLSA, Weekly

Two scenarios are presented where risk may be reduced.

Chart 1

Chart 2

One of these may happen or neither of them.

Either way, for risk to be reduced, a short entry is needed to be at a known resistance level (not advice, not a recommendation).

Let’s move on to the current positioning.

Positions: (courtesy only, not advice).

One of three events will happen at the next session.

1: Both positions stopped out

2: One position stopped out

3: No positions stopped out

Each outcome will provide a data-point where to focus (or not) in the current environment.

LABD-22-10:

Entry @ 18.1398: Stop @ 16.83

JDST-22-05

Entry @ 9.1666: Stop @ 8.79

Note: Positions may be increased, decreased, entered, or exited at any time.

***, Indicates change

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.

The Danger Point®, trade mark: No. 6,505,279

The Largest ‘Squeeze’, Ever

A Market Of Extremes

So, this is how it’s going to be.

The market itself is telling us it’s not going to be ‘well behaved’, possibly for years to come.

According to Goldman, link here, we’ve just had the largest short squeeze on record.

Friday, must have pushed it over the edge from the previously reported, ‘third largest‘.

The ‘Pontificators’

Everybody think’s they’ve got it figured out; We’re going to have stagflation, no wait, hyperinflation, no wait, inflation/deflation simultaneously, no wait, dollar collapse, no wait, gold to the moon, no wait, and on it goes.

What we really have, which is obvious to those ‘awake‘, is something that’s never happened before.

That ‘something‘ is here every day, multiple times a day.

Flash Crash, 2010

Every so often just as a reminder, this event is posted as an example; until that day, it never happened before either.

“Paper comes in, a big seller!!!”

 ‘Paper’ is essentially anyone (banks, hedge-funds, institutions, and/or retail) outside the pit.  Those in the pit are called ‘locals’.

Positioned At The Extreme

The largest short squeeze in history has actually performed a public service; the markets are at extremes.

With that, the short position in Junior Miners GDXJ, has already been discussed, link here.

We’re going to move on and talk about the elephant; more specifically, biotech SPBIO.

Biotech SPBIO

The table shows last week’s action when compared to the week prior. All major sectors had solid gains but it’s the right-most column that’s of interest.

The right-side column shows how far price action closed above the prior week’s high.

Once again, biotech shows overall weakness. It gets more interesting when looking at the weekly chart.

Biotech SPBIO, Weekly

It’s been three successive weeks of apparent up-thrust reversals that were negated each time.

Looking at the weekly below, what we have, is a huge bear flag that just so happens to be, Fibonacci 8-Weeks wide.

It’s possible, this congestion area is the mid-point of the overall move from the highs set during the week of February, 2021.

Compressing the chart and putting in a measured move target gives us the following.

If we have an actual Head & Shoulders top, that target is shown as well.

Either way, the downside potential is enormous; thus, requiring intense focus from a Wyckoff standpoint, i.e., during a bear market, identify the weakest sector for short opportunities (not advice, not a recommendation).

All of which brings us to positioning.

Positioning

On Friday, a discretionary exit was made from the entire LABD-22-09 position as (LABD) price action continued to decline with no end in sight.

Loss on the LABD-22-09, series was a drubbing of -12.2%

Then again, last week was the largest squeeze in history; taking that into account, the loss wasn’t -30% or -50%.

As the trading day progressed, LABD price action continued lower until low-and-behold, it reversed.

Once again, a position was entered (not advice, not a recommendation) but this time was different. Frist off, initial position size is smaller; about 60% smaller.

Secondly, the stop is an actual order that’s in the market (shown below).

Sounds obvious but we’re dealing with unprecedented times and market disruptions. Recall during the Flash-Crash of 2010, Kimberly Clark, or Colgate (if memory serves) went ‘no-bid’ and printed i.e., sold for 0.01.

That low print remained on the charts for years until it was ultimately removed.

If it can happen on the downside (i.e. when long), it can happen on the upside as well (when short).

Positions: (courtesy only, not advice).

LABD-22-10***:

Entry @ 18.1398***: Stop @ 16.83***

JDST-22-05***

Entry @ 9.1666***: Stop @ 8.79***

Note: Positions may be increased, decreased, entered, or exited at any time.

***, Indicates change

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.

The Danger Point®, trade mark: No. 6,505,279