Several times in these updates the word ‘collapse’ has been used to describe the potential for biotech.
The monthly chart below shows a Fibonacci projection based off current price action.
Note how projected levels match up with support and resistance areas:
Obvioulsy, this is a long term projection.
It may work out the short position in biotech via LABD, (not advice not a recommendation) will have to be exited and re-entered several or many times if/when the sector heads for the bottom.
Stay Tuned
Bonus:
The hourly chart of IBB below, shows Wednesday’s price action touching, then bouncing off the first Fibonacci projection.
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.
LABD inverse fund (3X inverse SPBIO), marked with time pivots and potential channel.
The plus or minus one-day on the Fibonacci counts, is well within acceptable limits.
There’s been so much focus on biotech because of the opportunity.
Trading congestion equals directional potential.
A good way to show that (downside) potential, is with the P&F chart of biotech IBB, below:
The initial projection targets the 120-area which is below the support levels at, 143 – 145. If penetrated, those support levels would likely become resistance to any upward retrace.
We’re about an hour to go before the regular open. LABD is trading flat to slightly higher.
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 two hits on the right side channel line provide confirmation of the trend.
An expanded version of the daily is below:
So far, we’ve had the blockage of the Suez Canal. Auto parts being sent to the bottom of the ocean off Japan. ‘Mysterious’ grain silo fires destroying harvested crops.
If transportation is shut down as a result of cyber attack, fuel pipelines off-line, no grease to lubricate the wheels or any number of other (planned … and don’t think there’re not) events, the last thing that’s going to help get anyone through, is a ‘stack’ of inedible metal.
It’s no secret this site’s been using the Biblical precedent of Genesis 41.
That is: Grain and Corn come first … then gold and silver.
The ‘stacking’ public has got this message reversed. Of course, this is not advice or a recommendation.
However, for those that can see, it’s so obvious the goal is ‘controlled demolition’ of the supply chain. All of it.
We’ll put everything back to ‘normal’ if you just get injected.
Meanwhile, biotech IBB, and SPBIO, have both posted a new daily low.
IBB is poised to penetrate the resistance area identified in this update, and come back to test the wide bar.
If that happens, we have a Wyckoff up-thrust in play. More analysis of biotech to follow.
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.
In a situation that’s straight out of any typical trading text: ‘When a market goes into a throw-over and then enters back into the range, it’s a classical analysis sell signal’ (not advice, not a recommendation).
That’s where Moderna (MRNA) is now.
Moderna’s the ‘chief cook and bottle washer‘ for the world-wide kabuki theater. So, we’re using it as a proxy for the biotech sector as a whole.
Separately, biotech index IBB, is retracing but has not posted a new daily low.
Inverse SPBIO fund LABD, has formed an hourly reversal bar and looks to be forming a daily reversal bar. As of this update, it has yet to post a new daily high.
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.
Being inverse leveraged 3 to 1, this vehicle is amplified; sector changes in character can be picked up earlier.
What’s clear is the net distance traveled by downward thrusts is narrowing … down to nothing.
It could be a pause before heading lower or it could be that downward action is exhausted.
As we head into the close, price action can be seen slightly retracing upward.
We won’t know if that’s all for the downside until LABD posts another (new) daily high.
Analysis Tip:
LABD made a new daily low during this session.
The interesting part; it had to post a new daily high (above yesterday’s high) to get to that low.
That’s the only way it could get enough fuel (i.e. create price instability) to push just 0.08-points lower … potentially signaling final exhaustion.
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.
Looking at the weekly close chart, we can see the wide range.
In addition, there’s a significant bullish divergence that (technically) gives the dollar, UUP, enough energy to test the top of that range; a potential that’s completely opposite the current narrative.
A this juncture, silver, gold and the miners are still correlated.
Yesterday, a potential top and reversal in miners GDX, was identified. Today, it appears to be hovering and looking unsure of its direction.
GDX has not posted a new daily high or low as of this update.
A sustained dollar rally (along with the bond market?) would be unexpected given what seems to be apoplectic hyperinflation ranting.
Separately, in biotech, the market (IBB) has stalled to the upside in a higher than expected test. Inverse fund LABD, made a new daily low and it too, has stalled.
Downward thrust energy on LABD is dissipating.
Technical update for biotech, planned for tomorrow … market permitting.
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.
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.
It’s about 80-minuts before the close and already, IBB’s printed more single day volume than in the past four years.
There must have been a huge number of stops at the resistance area for price action to launch so decisively.
Now, as we get near the close we’ll see if it was just short covering, or if there’s really some kind of demand to hold and move prices higher.
The 4-Hour chart (below) shows a potential reversal as we head into the closing hour.
It’s the trader’s discretion on how to interpret and position (if warranted) in this environment. This site does not make recommendations.
However, based on the technical and fundamental data provided over the past year, we’re expecting at some point, a complete collapse of the sector; bottoming-out sometime in mid to late October, this year; not advice, not a recommendation.
If IBB continues to push decisively upward from here, meaning, tomorrow’s session is follow-through action, it will most likely (but not fore sure) invalidate the ‘collapse’ scenario.
We’re at the danger point
One of many other factors helping the bearish assessment is the release of this report:
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.
From a July futures contract high of $1,711/thousand board-feet, futures prices have crashed to $1,284/thousand board-feet, in less than a month.
As this ZeroHedge article states, the futures collapse was precipitated by delays in construction.
Those delays were because of … well, high prices.
Now, the cycle starts.
Delays precipitated the price collapse. That in turn, will cause more delays as construction entities wait for lower prices.
Those lower prices could materialize. Right along with project cancellations from contract loss, job loss, earnings downturns and on.
Personal anecdote below (skip to ‘Analysis’ if not interested):
Yesterday, a trip was made to the local home improvement store … the one with the orange logo.
During robust economic times, the loading area at the lumber ‘contractors’ end, is so busy that pickups, flatbeds and trailers, are lined up in double rows.
This time, walking into the contractors entrance, there were no customers in the loading area. Treated fence pickets were stacked two – three bundles high in rows. At the same time last year, there we none available.
Going inside and down the lumber isles, inventory was well stocked.
The treated 4X4s were available (although more expensive) and another re-stock bundle was available to be pulled from an upper rack.
Treated 4X4s, are high volume sellers at that location (Ft. Worth area). It’s a good gage of economic activity.
Last year at the same time, there were no 4X4s in that rack for several months in a row.
At the time, similar reports of such were being presented by Uneducated Economist. No treated 4X4s, anywhere.
In the lumber isles, there were just a handful of customers (mom and pop types) and absolutely no professionals or contractors.
The lumber carts, typically called ‘H-Carts’ because of their H shape, were plentiful and all lined up on the main isle. That’s also different from a year ago when it was so busy, customers had to go search for their own carts out in the parking lot.
There was one cashier and nobody in line.
This is all happening around 5:00 p.m., on a Friday.
One Friday does not a trend make … but it is a data point. The lumber area of this store on a Friday afternoon (when contractors typically get stock for the weekend) was dead.
Analysis:
We’ll look at one of the usual suspects in the lumber industry; Weyerhaeuser (WY).
On the daily chart below, it topped and reversed right along with the futures. Its had a decisive trend break as well.
If we’ve seen the top in the lumber futures and if we’ve just had a crash, the events that follow, play out like a script.
Prices stabilize at some point and begin a counter trend move.
Everyone (almost) is fooled into thinking it’s coming back … until another break lower. That’s when the real panic starts; in the market as well as the economy.
Biotech, SPBIO is in this position now
After the initial reversal, prices stabilized; then came back in a counter trend. Thus far, they have reversed at the 23.6%, level.
Summary:
It’s probably an accurate statement, that nobody really knows what’s going to happen as a result of ‘speck’ injection. Seems like all information could be compromised (controlled opposition) in one way or another.
However, what tends to repeat with high levels of probability are specific set-ups in price action.
Price action is truth.
Above, we see WY either traded at a particular level, or it did not.
Once a crash scenario (if that’s what we have) like lumber futures gets set in motion, it will be years and potentially decades before prices return to or exceed the highs.
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.
If there’s going to be a big move, it’s the market’s job to make sure you’re not in it.
We’ve already had the push below, and reversal from, established support on inverse biotech LABD, May 28th.
At this point, we’re in a test that serves two purposes:
Frustrate the impatient and run the stops on anyone that’s incorrectly positioned.
The circled area on LABD, in the daily chart is shown on the hourly below:
Anyone that set their stop at the low of Wednesday, June 2nd (in what looked like a good location) has been stopped out.
On top of that, note how once that location was penetrated, price action ‘stopped dead’ (pun intended).
That’s the key.
Once the stops are cleared, there’s no more energy left to move lower.
As of this post, LABD’s already reversing from this area; supporting the hypothesis.
Positioning:
Short position in biotech SPBIO, via LABD, is being maintained; not advice, not a recommendation.
Summary:
The more this market gyrates and attempts to throw off participants, the more it looks like something big is in the works.
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.
The Danger Point® 