Category Archives: SPBIO

Tech Talk, Biotech SPBIO

August 24, 2022 By in $SPSIBI, Biotech, LABD, LABD-22-05, SPBIO, TDA-LABD-22-02, Tech Talk

Standard Fibonacci Test

If biotech’s reversing to the downside, then it’s behaving normally.

As we’ll see below, today was a standard 50%, Fibonacci retrace on the daily.

There’s an added bonus of 1 : 1, correlation on the corrective wave up to that 50%; shown on the hourly chart.

Just to get our bearings, we’ll present the longer time frame, the weekly below.

Biotech SPBIO, Weekly

Next, we’ll get closer in on the daily.

Observe the Fibonacci retrace from the recovery high (8/11/22), the interim low (8/22/22), and today’s potential retrace high.

The next chart is a zoom of the retrace area

Bonus: Hourly Chart w/ Fibonacci Projection

Corrective waves follow an ‘a-b-c’ pattern with each having Fibonacci relationships between themselves.

The hourly chart below has the retrace from the 8/22/22, interim low.

The current location of the top of ‘wave c’, is a near perfect 1 : 1, ratio of the initial ‘wave a’.

The zoom chart below attempts to provide detail on where the wave terminations were identified.

The left blue arrow is the top of corrective wave ‘a’.

The right-side blue arrow is the bottom of wave ‘b’ and the beginning of wave ‘c’.

Summary

So, what does that all mean?

We’re at an inflection point.

If SPBIO has retraced 50%, of its initial leg down from a long term high, then expectations are for continued downside action.

The fact we had a countertrend move that mapped out a near perfect 1 : 1, a-b-c correction, points probabilities to the downside as well.

However, in the market, there are no guarantees.

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

Three Amigos of Biotech

August 20, 2022 By in $SPSIBI, BEAM, FATE, IBB, LABD, LABD-22-05, MRNA, Positions, S&P, S&P 500, SPBIO, SPY, TDA-LABD-22-02, TWST, ZeroHedge 2 Comments

BEAM, TWST & FATE

It looks like having a real (positive) P/E, may be about to be important.

The prior biotech update said that so far, no P/E, negative P/E, and ‘no money down’ was not affecting the sector.

That is, until now.

Well, ok. I made up the ‘no money down’, part. 🙂

That little jest does not take away from the fact, biotech SPBIO, and its top three weightings, BEAM, TWST and FATE, have all reversed, decisively to the downside.

For the week just ended, BEAM is down – 22.86%, TWST down – 19.18%, and FATE down – 14.16%.

Back at the ranch in the IBB index, Moderna (MRNA) is also down – 14.65% for the week.

So, we have confirmation the entire industry is now continuing its downward course.

Contrast the reversal of index SPBIO, at – 7.04%, with S&P (SPY) at – 1.16%, and the market itself is telling us where to go for opportunity (not advice, not a recommendation).

At this point, all three amigos (BEAM, TWST, FATE) are in downward trading channels.

Trading channel for BEAM is the most aggressive. The weekly chart is below.

Beam Therapeutics (BEAM) Weekly

If BEAM maintains its channel for the rest of this year, the chart below shows the target area(s) for price action.

The coming week may let us know if this channel will be confirmed or negated.

Recall, the S&P is topping out and appears to be reversing.

Goldman says the squeeze is over but that ‘downside is limited’.

We’ll see.

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 Moderna (MRNA) Channel

August 17, 2022 By in $SPSIBI, Biotech, IBB, LABD, LABD-22-05, MRNA, Positions, SPBIO, TDA-LABD-22-02 1 Comment

Chief Cook & Bottle Washer

We’re about forty minutes into the session; Moderna (MRNA) has just confirmed the up-thrust reversal discussed in the last update.

It took seven trading days for MRNA, to post a new weekly low below 160.06.

That was plenty of time to perform research like finding this bullish outlook and deciding for oneself, whether to be bull or bear.

This update is brief.

Two charts of MRNA, are shown below.

Price action’s in a channel with the right side declining at approx: – 93.7%, annualized.

Moderna MRNA, Weekly Bar

Compressed version.

We’re using MRNA, as the proxy for the biotech sector.

The previous report showed a weak 23.6%, retrace and potential reversal.

With today’s print below 160.06, it looks like an initial confirmation of the right-side trend line (not advice, not a recommendation).

Stay Tuned

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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

No P/E ? … No Problem … Yet

August 14, 2022 By in Biotech, CVNA, LABD, LABD-22-05, Livermore, Loeb, Positions, SPBIO, TDA-LABD-22-02, Wyckoff 1 Comment

Biotech SPBIO, Has No P/E

Is this like Carvana on steroids?

Looking at the top ten components of the SPBIO sector, making up over 14%, of the weighting, none have a P/E ratio.

The three largest weightings are listed below along with hyperlinks to their corporate summaries or research.

Beam Therapeutics Inc.: BEAM

Twist Biosciences Corp.: TWST

Fate Therapeutics Inc.: FATE

The Return on Equity for the list is Negative – 31.9%

With returns like that, it’s unlikely a positive P/E, is showing up anytime soon.

The Market Itself

Livermore worked to prefect his technique, searching for what’s going to happen in a ‘big way’.

Wyckoff discovered the market itself, decides on its next likely course.

Loeb presented the power of ‘focus’; Concentrated positions that eschewed the mediocre mantra of ‘a well-diversified portfolio’.

It’s important to note, Loeb was the former Vice Chairman of E.F. Hutton. The old commercials from the 70s, like the one linked here, were talking about him: ‘When Loeb talks, people listen’.

The Biotech Short

The vultures are circling this sector.

We’ve already shown in the last update, speculative volume on the 3X Inverse fund LABD, is literally off the chart.

The corporate links above, give us a potential ‘why’ for their short positioning.

All three of those companies have a common theme.

Stay Tuned

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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

Biotech’s, Jaw-Dropping Volume

August 13, 2022 By in $SPSIBI, Biotech, David Weis, LABD, LABD-22-05, Positions, SPBIO, Spring-to-Up-Thrust, TDA-LABD-22-02, Wyckoff, ZeroHedge 2 Comments

Bears Capitulate

According to this, just out on ZeroHedge, that’s what’s happened.

As we’ll see below, there’s certainly something unprecedented going on, specifically in biotech.

The prior update made the argument, biotech SPBIO, has a unique distinction that’s showing up on the leveraged inverse fund LABD, shorting the sector.

For illustration purposes, we’re going to do a little ‘trick’.

The weekly close of SPBIO, is shown below.

This index does not provide volume but we’re going to ‘fix’ that by putting in the lower panel, weekly volume for leveraged inverse fund LABD.

It’s clear, as SPBIO reached all-time highs and reversed, short activity via LABD picked up significantly.

However, the past several weeks tells us from a Wyckoff perspective, something major could be about to happen.

As SPBIO, has moved counter-trend higher, activity going short (via LABD) has gone off the scale.

Spring-To-Up-Thrust

If the unprecedented volume activity weren’t enough to draw attention, we also have a repeating set-up that’s well, repeating; Spring-to-Up-Thrust.

With the idea originally obtained from the late Daivd Weis, later confirmed time and again, it’s a unique (high probability) characteristic of market behavior.

That’s where we are now.

SPBIO: Up Close & Technical

It may be hard to see in the above chart.

The next one, moves closer-in.

The upward advance of SPBIO slowed dramatically last week, closing up just +1.68%, for the week.

Contrast that move with the week prior at +13.83%, and the slowdown is evident.

All Hands, On Deck

Figuratively speaking, everything’s been dropped to focus exclusively on this sector. It’s obvious, what’s going on at this juncture is unprecedented.

That goes for the rest of the markets as well.

However, this sector alone, is telling us to ‘look here’; potentially setting up for a major reversal.

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

‘Follow The Money’

August 12, 2022 By in $SPSIBI, Biotech, LABD, LABD-22-05, Livermore, Positions, SPBIO, TDA-LABD-22-02, The Speck, Wyckoff 1 Comment

Well, Almost … Now, It’s ‘Follow The Volume’

‘Follow the money’ was the clue back in the days of the Watergate scandal.

To unravel the secrets of the break-in, you had to follow the money trail.

Not much has changed since then; except this time around it’s important to look at the volume as well.

The 3X Inverse List

Compiled below, is a list of triple-leveraged inverse funds.

Only one (in bold) has recently posted record breaking volume day after day and week after week.

BNKD, DRV, EDZ, FAZ, LABD, SMDD, SOXS, SPXS, TMV, TZA, WEBS, YANG

From a Wyckoff analysis standpoint and from the volume itself, LABD is clamoring for attention.

The daily chart shows us volume is off the scale.

Biotech SPBIO, 3X Leveraged Inverse LABD, Daily

No other leveraged inverse fund’s chart (in the above list) has this look.

Somebody, Always Knows ‘Something‘

Wyckoff wrote back in the day, ‘insiders’ can’t leave well enough alone; their greed is too great to keep under control.

They take their information and act accordingly.

Our job is to look for those actions, decipher them, and then ourselves, act accordingly.

Who Could It Be Now?

So, what could it be that would cause ‘insiders’ (and professional speculators) to focus nearly exclusively on biotech and go short the sector.

Hmmm, just what could it be?

Well, the mainstream media doesn’t seem to have a clue either. It’s all a big ‘mystery’ to them (although cracks are appearing).

It’s The ‘What’ … Not The ‘Why’

Both Livermore and Wyckoff admonished us not to focus on the why of market movements. The ‘why’ will always come out later, after the fact.

They were concerned with ‘what’ is happening; is price moving up, down, or going sideways in accumulation.

Summary

There’s no mistake based on the chart of LABD above, something major, potentially long-term, is setting-up in the biotech (SPBIO) sector.

The chart itself tells us to focus specifically on this area (not advice not a recommendation).

With that, we’re about mid-way through today’s session.

Price action appears to be going through a test of yesterday’s reversal.

Stay Tuned

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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 Big Move & The Big Money

August 7, 2022 By in 1907, Biotech, CVNA, Livermore, Prechter, SPBIO, Wyckoff 1 Comment

Common Characteristics

Everyone talks a big game, wanting to trade like the next Jesse Livermore or James R. Keene.

To aspire and reach the performance level of the legendary, few know, it’s almost a requirement that several fortunes must be won and lost along the way.

That’s why Prechter said it years ago (paraphrasing), ‘It’s best to lose your first fortunes early; that way, you have time to recover.’

One very public and famous ‘recovery’ from a blown account, was Livermore’s trade during The Panic of 1907.

He was flat broke but sensed a big down move about to happen in the markets.

Legend has it, he pawned his car for $5,000; then, using that capital, shorted the market during the panic and profited over $1 million, covering shorts near the bottom.

That was then. Is there a now?

The short answer is yes. Huge moves (especially down) are still a potential.

Let’s take a look at how one opportunity presented itself.

Big Move Characteristics

There are at least three characteristics for a major move:

Price Extreme

Sentiment

Catalyst

To demonstrate how that criteria can be used, we’re going to use one very recent example:

The Carvana Crash

From the all-time CVNA, high of 376.83, set on August 10th, 2021, to the most recent lows (thus far) posted July 14th, this year, was a collapse over -94.8%.

Price Extreme

Carvana Has No P/E and maybe, never had one.

“If your biggest claim to fame is that you ‘invented’ a vending machine … you’ve got real problems.”

With that, and hovering at nearly $380/share, it’s reasonable to say CVNA, had reached an extreme.

Sentiment

To go along with the price and no earnings was the sentiment … literally off the charts.

Used cars, years old, selling above the original MSRP. It was a never-before-seen event.

From a trading standpoint, it does not matter the ‘reason’ for the sentiment; only that the extreme was there.

Catalyst

Now, the hard part. The ‘catalyst’.

Just what was it that pricked the bubble for CVNA?

For our example, it looks like it was one sub-par earnings release too many. At the time of release, there was a subtle change in the character of price action.

About one week after the earnings release in August 2021, CVNA, broke a long-term trendline and never looked back.

Summary

The above example has been highly simplified for brevity.

Even so, we can still use these criteria to look at other market conditions … other sectors.

As you may have guessed, one sector that meets at least two of the above conditions, is biotech, SPBIO.

The third (Catalyst) condition may have been met this past week on August 3rd, with this report. Another link is here.

The take-over candidate GBT, releases earnings on Monday (tomorrow).

Let’s see what happens next.

Stay Tuned

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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

Biotech Tags The 200-Day

August 5, 2022 By in $SPSIBI, Biotech, GDXJ, LABD, LABD-22-05, Positions, SPBIO, TDA-LABD-22-02

Now Comes The Dangerous Part

In what seemed to be never ending thrusts to the upside, biotech SPBIO, appears to have tagged the 200 Day, Moving Average, ready to pivot.

We’ll start first with the daily chart of tracking ticker $SPSIBI (SPBIO) to show the near contact with the 200 Day.

SPBIO, Daily

Next up is the 3X Inverse Leveraged fund, LABD.

It has printed record volumes (changing of hands), on weekly, daily, hourly, half-hourly and even a 15-minute basis.

Now, with today’s extreme move, we may be done.

SPBIO Leveraged Inverse LABD, Hourly

The chart is compressed to show the entire retrace move so, it’s a bit hard to see.

A zoom version is provided on the second chart

Zoom version

The markets in general and biotech specifically are in a precarious position.

The weekly chart of SPBIO ($SPSIBI) below shows the cross of the 50-Wk and 200-Wk MAs.

SPBIO Weekly

This is the only major index to be posting this characteristic (with GDXJ, very near).

It’s a short squeeze in a major downtrend.

Price action itself, says so.

Stay Tuned

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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

Before The Open

August 3, 2022 By in $SPSIBI, Biotech, LABD, LABD-22-05, Positions, SPBIO, Wyckoff

Adverse Move, Biotech

Let’s get straight to it.

Has the biotech short failed?

Just after yesterday’s post inverse fund LABD bean to pull back from its trend line, an early warning.

With that in mind, let’s take a look at the index LABD is supposed to track and see what it says; SPBIO.

Since we’re using the hourly chart of LABD, we’ll do the same for SPBIO.

Biotech SPBIO, Hourly

What we have is a spring set-up that’s now in progress.

The resistance area (magenta line) is well defined. Price action contacted this area yesterday.

Now, the pre-market shows we’re going to open above this area. Inverse fund LABD is trading in the pre-market, down a stiff -1.75-pts.

Spring-to-Up-Thrust

Over and again, markets repeat behavior.

Once of those repeating patterns is what’s called spring-to-up-thrust.

If that’s where we are now (a big if), price action SPBIO, will not stay at elevated levels long.

Summary

If we’re in yet another shakeout, the expectation is for price action to retrace the opening gap higher within the first hour of trading.

How price action behaves if/when that happens will help determine if we’ve had a failure; SPBIO, heading much higher or one more shakeout before lower levels.

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

Biotech Short … Simple, Not Easy

August 2, 2022 By in $SPSIBI, Biotech, LABD, LABD-22-05, Positions, SPBIO, TDA-LABD-22-02

Stop Runs & Tomfoolery

Sometimes you feel like an idiot and sometimes you don’t 🙂

Question: How do you know where the market’s going to go?

Answer: Put in your stop; that’s where it goes.

The stop level mentioned in yesterday’s update was not physically placed in the market but a mental identifier; indicating if the LABD trade was subject to failure.

As if on cue; no sooner was the stop posted than today, the market heads right for it.

In or Out

With the level being tagged so easily, it means that one’s thinking is right along with the amateurs, doing the same thing. Ouch.

So, price action penetrated the LABD 26.50, lows.

It’s what happened next that’s important.

It took less than one hour for LABD, to reverse off the lows and begin to print decisively higher.

Therefore, we just witnessed a run on the stops.

At the trader’s discretion, LABD-22-05, was maintained throughout the stop-run process.

The hourly chart of 3X Leveraged Inverse Fund LABD, provides detail; note LABD got itself back above an existing trend line.

SPBIO 3X Leveraged Inverse LABD, Hourly

Time is approximately 2:11 p.m., EST

Typically, a ‘bump-and-run’ move like this signals the kick-off for price action.

Summary

Biotech appears to have gyrated enough at the extremes to frustrate both the bulls and bears.

With today’s run, we may now be ready for a directional move; LABD to the upside.

Let’s see what happens next.

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