3:34 p.m., EST
SPBIO may have completed its correction.
Above is the hourly SPBIO chart; inverted and annotated.
Under the conditions shown above, when price action penetrates support and then reverses, it’s called a Wyckoff ‘spring’.
From this point, the expectation is for a moderate rise, then test and then a dynamic rise to the top of the trading range.
Was last week the correction?
Is it over?
To provide perspective on that question, we need to go back in time.
First, to Dr. Elder’s “Entries & Exits“, published in 2006.
Then, way back to “Reminiscences“, published in 1923.
As a reminder, we’re looking at biotech (SPBIO) from the perspective of being short the market.
The primary vehicle for that short, is highly leveraged inverse fund, LABD.
The last update gave a hint at the desired timeframe.
If the markets are in the process of reversing, ultimately going to the long awaited (since 2009), final draw-down (i.e. crash), then a likely bottom would occur where they (almost) always occur; during the third week of October.
In a nutshell, that’s the time frame.
Conversely, price action is the final arbiter. If biotech winds up effectively saying ‘not now’, well then, it has the final say.
Back to ‘Entries & Exits’.
One of the traders highlighted in the book (in addition to Weis), was William Doane; former Head Technician for Fidelity.
His timeframe is much longer than the typical market participant. He, like Weis are looking at monthly, quarterly and yearly charts.
That fact in and of itself, provides an edge.
One of the main take-aways from his section was (paraphrasing):
‘The first correction is the hardest. If you can get through that, it’s typically smooth sailing from then on’.
The biotech short via LABD (not advice, not a recommendation) may be at that point now. Painful to watch but necessary.
Next, we go to ‘Reminiscences’.
Those who have read the book, know all about ‘Turkey’; Mr. Partridge.
As the book states, he was much older than the rest who frequented the brokerage. Also, he did not appear to be that active in the markets (thus minimizing his transactions). He was interested in the big move.
The admonition from Partridge, was: ‘Don’t lose your position’. Don’t exit out, expecting a pull-back … that ultimately never comes.
So, we have two examples; three if you include Weis that begin from the very long time-frames and work inward.
Now, on to the market:
The long term, Quarterly analysis has already been done; linked here.
The chart in the link, is from last quarter and since then, (during this quarter), we’ve made new lows.
On the fundamental side, evidence is building by the day on what the ‘speck’ protection is all about.
If you’re really interested in the big picture, here’s a link to a five-plus hour presentation that spells it all out.
Here’s J. P. Sears’ take on the same thing.
SPBIO, the daily chart:
The SPBIO, has been inverted and annotated
We’re currently between support and resistance.
Momentum indicators MACD, on the Monthly and Weekly remain in a downtrend.
Using IBB, as the proxy for Quarterly momentum (not enough data for SPBIO), the indicator is flat.
Momentum’s in favor of (maintaining) a short position; not advice, not a recommendation.
The monthly chart of SPBIO (inverted), has price action coming back to former resistance (now support). This is normal market behavior.
Recall, that on the downside, if there is some kind of ‘event’, markets can slice through apparent support levels with ease.
With that in mind, on the inverted chart above, the next major ‘resistance’ level may or may not be of consequence.
Summary:
Each trading week is important.
However, next week will likely a pivotal one; providing more information on whether to maintain short or exit and stand aside; not advice, not a recommendation.
Stay Tuned
9:09 a.m., EST
If there’s going to be a big move, the market will make sure you’re not along for the ride.
The proverbial ‘gut check’, as David Weis used to call it.
It’s an adverse move that’s intended to shake any (all, if possible) weak hands out of their positions.
How will we know if that’s what’s going on with biotech’s, SPBIO?
Yesterday, was an upside reversal bar on the daily SPBIO, chart. Will the market go higher (LABD, lower) from here?
The first clue will be the open.
If SPBIO opens lower, with inverse LABD opening higher, we’re on the right track for more biotech downside.
If LABD makes a new daily high … above yesterday’s LABD, 30.42, high, we have confirmation of a shake-out.
Right now, we’re still in the pre-market.
However, LABD is already trading up between +3.5% – +4.7%, which weighs probability to more upside … downside for SPBIO.
If SPBIO somehow makes a new daily high (LABD, new low), the bulls are gaining a foothold.
At this point, the Project Stimulus account remains unchanged (not advice, not a recommendation):
Stay Tuned
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9:51 a.m., EST
Everyone loves to hate the dollar.
That sentiment extreme is a set-up … for the bulls.
If the UUP dollar index ETF, manages to push below the 24.00 – level, it presents the opportunity for a significant bullish divergence.
As Van Metre has stated many times over the past few months, the market’s not expecting, and not in position for a dollar rally.
How can it be … with the rabid gold bulls thrashing about with each upward blip in GLD, GDX and GDXJ.
From this site’s perspective, we’re staying away from that (gold) market and have focused on biotech … where things are really getting underway; but now, back to the dollar.
The weekly chart of UUP, shows the potential set-up.
If somehow we get a (narrow range) push below the 24-level, it would set up a clear bullish divergence on the MACD.
At this point, anything can happen.
Saying that gold will crash if the dollar launches upward is certainly possible. However, in today’s world, the opposite could happen as well.
Just one more reason to say away and focus on shorting an index that’s decisively moving lower: Biotech (not advice, not a recommendation).
Side Note:
The whole ‘divorce’ thing, you know what I’m talking about, could be a signal in disguise.
The ‘higher ups’ may have decided our cardigan wearing benefactor has reached the end of usefulness.
If so, how many biotech rats are now going to jump ship (before the paddy wagon arrives) knowing the jig is up?
Could that be why SPBIO, posted new lows in five time-frames; Daily, Weekly, Monthly, Quarterly and Yearly, last week?
Stay Tuned
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11:01 a.m. EST
Early morning action confirms trend’s right side.
Massive downside potential for biotech SPBIO; upside for inverse, LABD.
Unless there’s some kind of unexpected reversal, LABD is showing its colors … huge upside potential.
As expected, LABD has completed its testing action previously discussed in these two updates; here and here.
At the minimum, we’ve got a right side LABD trend that if followed, will result in a doubling of current price near the end of this month or early next.
A trailing stop can be used which adheres to the (now confirmed) trend; not advice, not a recommendation.
If LABD really is in the channel shown, the top of the range even at this point, is around the 170-level; nearly 550%, from current price.
As always, anything can happen. For now, we’re sitting tight and letting price action dictate the next trading move.
The Project Stimulus account will need to get above the $2,000 level before margin is allowed (by the broker).
By that time, it may be a moot point; volatility could be too high for any kind of size increase.
Charts by StockCharts
While the markets grab headlines of all time highs, biotech’s at the crossroads of collapse.
This site has zeroed in on the most likely candidate to head decisively lower once the bubble has burst.
In fact, if we look at the table of tracked markets below, biotech’s SPBIO, has taken over downside leadership.
Next to last is GDX; the senior mining index.
Repeated many times before, this sector is overcrowded with delusion on both sides. From a trading standpoint, no thank you.
Daily and monthly charts of biotech SPBIO are below. Both charts are inverted and have Fibonacci projections.
The charts are essentially clean so they don’t clutter the data.
Daily SPBIO (inverted):
Monthly SPBIO (inverted):
If SPBIO gets to the extreme Fibonacci projection of 261.8%, it will represent a sector decline of just over -92%.
Sounds about right; not advice, not a recommendation.
Recall, from the 1929 highs to the lows in 1932, was around -84% (depending on the source).
Under those extreme circumstances, -92% decline is not unreasonable.
Of course, if a collapse does happen, it’s not likely to go straight down. The entire ’29 crash did not go straight down either. There were many false rallies on the trip to the bottom.
12:26 p.m., EST
The Great Depression is about to be eclipsed by ‘The Greater Depression’.
The Great Depression Diaries, is an excellent glimpse into the realities and timeline of a financial collapse.
After watching and listening to all segments, if you changed the dates, you’d think it’s talking about the here and now.
Three key takeaways are:
We can look at today’s payroll data as a pivot point. For whatever reason (out of work, being paid not to work), the economy’s not coming back.
The belief the economy’s going to be stronger once the benefits run out (as stated in the linked article) is false.
The current economy is being intentionally destroyed.
That’s not too hard to determine.
Here’s just one more bit of data (unverified, but still of note) to support that assessment.
If you’re unemployed, starving to death, you’ll be a ready face-diaper wearing compliant subject; easily coerced into being injected (executed).
Obviously, the goal is to be as independent, self-employed as possible so we’re not that person.
Which brings us to the culprit du jour: Biotech.
Yesterday, the expectation was for a reversal and test (that day) before SPBIO continued its downward trajectory (LABD higher).
It looks like the test is lasting two days (maybe more) instead of one.
Inverse fund, LABD is currently trading near 24.15. That’s right in the vicinity of the expected range between 23.90 – 24.30, stated yesterday.
LABD did push a little bit lower in the early session to 23.68, but still within expected range.
LABD is testing the right side channel line and trying its best to break through. Thus far, the low for the day remains at 23.68.
If there’s an upward (LABD) reversal from here, a Fibonacci Day 8, from the original Day 55 low, it would give more confirmation we’re at least following the trendline; potentially at the very right side of a huge trading range.
Stay Tuned
10:19 a.m. EST
Biotech’s on track for a sustained decline
Inverse fund LABD, major upside potential
It’s possible, after ‘Day 55’, LABD (above) attempted to negate the uptrend (pushing out of the right side) … only to find itself a few days later back in the channel.
Looking at the big picture, could or will LABD reach the upper channel line?
Is that possible?
After the experience with oil futures going negative (last year) the first time in market history, it should be obvious, anything can happen.
If LABD’s in the trading channel shown, we’re still in the early stages of the move.
Today, the expectation is for price action to reverse; coming back to close (or test) near the trend line around 23.90 – 24.30.
If it does and then gaps higher tomorrow (Friday), thus confirming the trend, it’s potentially the last stop for low risk positioning (not advice, not a recommendation).
Otherwise, with LABD up 7%, as of this post, we could already be off to the races.
The ‘project’ account is unchanged:
Charts by StockCharts
11:12 a.m., EST:
Word’s out on the street.
In what may be just the tip, two links below are businesses denying access to those who have been injected.
Florida private school prohibits teacher access.
Physician’s message about denied access to services.
Here’s the catalyst discussion related to the above links.
Here’s a link to the PDF.
Note: The last two links do not verify the veracity of the referenced material. Be advised.
Momentum is building for some kind of ‘tipping point’.
We may be there now.
We’re looking for an avalanche of reports whose combined (fundamental and technical) effect is catastrophic implosion of the biotech sector.
Market Analysis:
The chart speaks for itself. It’s obvious biotech has reversed and could be in serious trouble.
The inverse fund LABD is up a stiff 10.5%, as of this post:
We may or may not have a trading channel as shown.
The right side trendline will need more confirmation. As always, anything can happen and the nascent move could fall apart.
However, what is known:
SPBIO’s (and LABD’s) pivot was called ‘to the day’.
The “Iceberg” notation references this report, where the probability of SPBIO downside at that juncture was presented.
That analysis was correct. SPBIO never looked back.
Positioning:
Our ‘project’ position remains open (not advice, not a recommendation). The correct stance under current circumstances is to let price action take LABD higher.
As Livermore said nearly a century ago, the hard part now is to ‘sit tight’. Let the market determine when the move has ended.
Stay Tuned
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12:31 p.m. EST
Of the two emotions, fear is easier to trade.
Trading professionals prefer down markets.
Even in his trading video, the late David Weis remarks … ‘I have a preference for down markets …’
Profits come nearly twice as fast and the bottom is easier to detect.
With that in mind, the daily chart of inverse biotech fund LABD, has been noted showing both emotions:
Extreme fear shows up as spikes at the trend line. Also noticeable, the spikes are widely spaced.
Greed on the other hand, is spaced closer and harder to detect. Remember, we’re looking at the inverse (LABD); fear and greed locations are swapped.
Moving on to the set-up, the Wyckoff spring:
Considering the current situation … i.e. valuations, margin debt, retail participation extremes, the above forecast is a modest one.
A potential doubling in value (measured move).
The expectation is for LABD to contact the upper trading range somewhere around 27.50 (not advice, not a recommendation).
If it does and then breaks to the upside, a standard measured move (trading range distance, magenta lines) would target the 40-area.
At this juncture, the market (SPBIO) is giving no overt indication of imminent collapse.
This is how markets work.
If we do get the expected wipeout, be prepared for the usual suspects to come out and say ‘No one saw it coming.’
Stay Tuned
The Danger Point® 