As biotech XBI, nears support levels (charts forthcoming), all short trades have been closed in the pre-market session (not advice, not a recommendation).
Trade LABD-25-06, was closed just after 7:00 a.m., EST with a profit slightly above +27%.
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.
Early yesterday, biotech XBI, got stretched into an apparent squeeze.
That squeeze printed a high at 75.86, which as of this post (10:43 a.m., EST) is holding.
The chart shows what’s technically called ‘inside action’ or an ‘inside bar’. Today’s trading is taking place within the range of yesterday’s bar.
Biotech XBI, 4-Hour
There’s a lot going on.
The expectation was for this morning’s open to post above yesterday’s high; it didn’t happen.
As of this release, price action remains tight, not pushing significantly higher or lower.
Tight action typically precedes a directional move.
Positioning
With the above conditions in play, a short has been re-established (LABD-25-06) with a very tight stop … one, or two ticks, above yesterday’s XBI, high. (not advice, not a recommendation).
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.
There are sure to be plenty of post-mortems over the weekend; usual suspects giving us their assessment on what’s already happened. 🙂
Sometimes the question, is not ‘what’s happened’, but ‘what has not happened’.
That’s where the opportunity may lie.
Market Implosion
Over the past week, there were wide price bars, with action unstable in all major indices (ETFs): DIA, IBB, IWM, IYM, IYR, QQQ, SOXX, SPBIO, SPY, XLF, and XOP.
However, what did not implode (completely), are the car dealerships; specifically, CarMax and Carvana.
For this update, we’ll look at CarMax.
CarMax, KMX, Weekly Close
On a close basis, KMX, has bounced off the lower wedge boundary and is near the resistance area (magenta line).
Price action could be positively biased in the coming week as a result of ‘tax refund’ car buying (not advice, not a recommendation)
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 biotech short LABD-25-05, has been closed: Profit on the main position is +61.25% (not advice, not a recommendation).
While the market is hysterical, price action in XBI, indicates the current down move is losing (some) energy, hence the reason for the exit.
Biotech XBI, Daily
Exit was made at the lower channel line (demand line) contact.
The market could certainly continue lower from here.
However, from past experience and watching huge profits erode to only mediocre results, the same mistake is not being presented here (not advice, not a recommendation).
Meanwhile, the gold miners don’t look like the safe haven everybody thought they were.
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.
Those on this site daily, knew something was about to happen in a big way.
It was just, when.
Now, markets are volatile if not imploding.
Nearly all sectors reversing at once.
As of this post (10:55 a.m., EST), some of those are attempting to recover (GDX, GDXJ, SILJ) with others down hard (not advice, not a recommendation).
There were plenty of clues:
Massive volume increase in GLL, strange activity in biotech, then resignation at the FDA, failure of NVDA to get back to a 50% retrace, the list goes on.
As mentioned yesterday, one sector that’s continuing lower is biotech, XBI.
Biotech XBI, Daily
There may be several trading channels in effect. Only the most aggressive (so far) is shown.
Note the locations of short positioning via LABD (not advice, not a recommendation).
As of this post, the initial LABD short, entered on March 25th, is up over +40%.
Going Forward
So, what happens now?
For this trade, Livermore said it best (paraphrasing):
Position on the right side of the market (the correct direction), then wait.
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.
That’s two times in a row, Carvana hit a target area (presented on this site) in the after-hours session.
The last time was here, CVNA printed 310, in the after-hours on February 19th.
Then, just hours ago, price action thrust higher into the zone in this post, printed at 243.6, then collapsed.
We never got to ‘Day 34’.
However, the real story may be in biotech XBI, with huge swings in both directions; currently (as of 6:35 p.m., EST) trading below today’s regular session low.
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 the trendline is in-effect, meaning the market’s hanging in mid-air in a false breakout, getting back into that trend may result in some dramatic downside action.
Well, we got the dramatic downside.
Biotech XBI, collapsed nearly -11%, and 3X Inverse Fund LABD, is up +38%, and climbing.
As Wyckoff said a century ago:
‘Someone always knows something … and that ‘something’, shows up on the tape.’
It turns out in this case, showing up on the tape, was this, and this.
Biotech XBI, Daily
The chart from the week-ago post, has been updated.
As is typical, the ‘reason’ for last week’s price action comes out later, after the fact.
Positioning
At this point, trade LABD-25-05, is being maintained (not advice, not a recommendation).
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.
The markets don’t like uncertainly and that’s just what we have with biotech.
As the chart shows, the question becomes; is it a trend breakout, a breakout and test or a breakout, test, then possible failure?
This interview with Ed Dowd just days ago, paints a bearish picture for the overall markets.
If so, and we apply that scenario to biotech, the odds don’t seem to favor the upside (not advice, not a recommendation).
With that, let’s get to the action.
Biotech XBI, Daily
Last Friday, the 21st, was Fibonacci Day 89, from the November 11th, 2024, highs.
If the trendline is in-effect, meaning the market’s hanging in mid-air in a false breakout, getting back into that trend may result in some dramatic downside action.
On the bullish side, if it’s an upside breakout, ‘normal’ behavior is for a ‘test’ of the trendline.
Either way, both scenarios favor more downside (not advice, not a recommendation).
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.
While we can’t officially declare biotech dead like ‘Bones’ Dr. McCoy, we can say the charts below, paint a less than bullish picture.
The XBI, is so packed full of nuances, it needs at least two charts.
Biotech XBI, Daily
First, apparent weakness.
Price action’s only been able to retrace 23.6%, after penetrating support (blue line) and forming a Wyckoff ‘spring’ set-up.
On the far right, just below the magenta line, the grey lines show a minor up-thrust (reversal).
Next, we have a series of spring set-ups, that have failed.
Each time a spring condition is created, price action rises for a brief period, then collapses.
At the far right, the spring (shown in the first chart) appears to have failed; now subdividing lower.
Positioning
During Friday’s session, as price action began to rise unexpectedly, short LABD-25-03, was closed.
Then, late in the day after XBI appeared to have reached its high and reversed, a new short position, LABD-25-04, was opened (not advice, not a recommendation).
Obviously, the expectation for the coming week, is XBI to continue lower.
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® 