Fractal Symmetry … & … Biotech

Repeating & Infinitely Complex

Broccoli

Every market has its own characteristics; patterns that repeat.

Biotech (SPBIO) is no different.

Based on its own repeating fractal characteristics, probabilities continue to point to the downside; but first, the ‘reset’.

Out Again, In Again

Everyone has their own style, risk, and pain tolerance.

What’s presented on these posts is NOT financial advice.

It is however, how one professional is approaching, managing, and positioning in what may go down in history as the largest financial, societal, and political collapse ever.

Let’s not lose sight of that ‘macro’ condition.

It’s difficult to grasp the enormity. The ‘pundits’ are already looking for a ‘bottom‘; a bottom that in reality, is probably years if not decades away.

This past Friday, saw a complete exit of the short position LABD-22-05 & TDA-LABD-22-02 (not advice, not a recommendation).

As we’ll see below, once SPBIO, price action showed itself to be failing its up-move and subsequently reversing to the downside, the short was re-established: LABD-22-06.

In effect, the entire short trade was ‘reset’.

At the close, LABD-22-06, was well in the green.

By the way, After The Close … was released just before 6:00 p.m. EST, yesterday. That gave anyone who wanted, a two-hour window to position in the after-hours market (not advice, not a recommendation).

Now, on to the fractals.

Biotech SPBIO, Weekly

We’ll go straight to the marked-up weekly.

The Fibonacci retrace tool shows SPBIO, dipped down to 61.8%, before rebounding higher; a deep retrace, indicating overall upside weakness.

The zoom version below shows the detail of price action rebounding off the 61.8%, then going straight to 38.2% before backing-off.

Here’s The Fractal Part (below)

Getting closer-in on this past week’s action, we’ll use an hourly chart.

It shows the closing low on Monday, the rebound from Tuesday through Wednesday, the retrace on Thursday and the Up-Thrust on Friday.

SPBIO, Hourly

And with zoom.

Once again, during the retrace, price action went to the 61.8%, level just like it did on the weekly.

Characteristics repeating on multiple time frames.

Deep retrace typically indicates overall weakness.

Test, Fail, or Not

This coming Monday, anything can happen.

Price action can come back to the up-thrust and then reverse lower: Test.

It can come up and penetrate the up-thrust, moving decisively higher: Fail

It can gap-lower, move lower, never look back: Not.

The Danger Point®

That’s where we are now.

If price action moves decisively higher and penetrates Friday’s high, it then precipitates an exit of the LABD position.

The other two scenarios, indicate maintaining the position; adding to the size as the market allows (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

After The Close …

Biotech Fails To Move Higher

Most important of all in trading, are the failed moves.

Failed moves offer the potential for low-risk entry.

What originally appeared to be a strong launch higher that may have taken SPBIO to a 50% retrace, failed at 38%.

The sector closed up for the day but far below its session high.

Biotech SPBIO, Daily

Price action closed well below the resistance area.

Zoom version below shows slight new daily high (mini-up-thrust) before retracing lower.

The technical details of what is going in will be covered over the weekend.

However, from a positioning standpoint, the short was re-established (via LABD) as it was obvious the move higher was failing (not advice, not a recommendation).

The new short position is labeled LABD-22-06, with an initial entry of LABD, 22.12.

More details to follow.

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 … The Update

Short & Sweet

Markets are in a rebound (somewhat) higher which includes the biotech sector SPBIO.

All positions have been exited in anticipation of a retrace to the 50% area shown below (not advice, not a recommendation).

The daily chart of SPBIO, notes the most likely location at this point for a corrective move.

The trendlines are presented on the chart to show we’re below 50-Day and 200-Day averages … indicating probabilities remain to the downside.

Note the ‘compression’ of those averages … another clue we’re in a retrace and not a complete reversal.

The blue (retrace) line has been extended … showing that’s it’s also an axis line about which SPBIO is oscillating.

Summary

On the sidelines for now … waiting for another entry opportunity (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

Bear Market Bounce

And Then … It’s Gone

How do you know it’s a bear market?

Sharp up moves like yesterday, only last one day … if that much.

We’re talking specifically about the bond market and the BOE announcement … the effects of which have already faded.

It feels like the 2008, meltdown only 10-times larger.

Remember, there’s no money left to save it (the market) this time.

Yesterday’s update discussed the potential for biotech SPBIO, to rally … which it did.

However, when looking at the daily close chart of SPBIO ($SPSIBI) below, we see that price action stopped right at the confluence of two trend-lines.

Biotech SPBIO, Daily Close

Next, we’ll look at the leveraged inverse fund LABD.

It was a stiff whack downward; then again, price action is confirming a trend … and potential channel.

SPBIO, 3X Leveraged Inverse LABD, Daily

The lower trendline does not look like much.

However as noted, it’s rising at approximately + 5,900%, on an annualized basis.

Summary

It’s 15-minutes before the open and LABD, is up about +3.87%, in the pre-market.

For today, the lower trendline is the one to watch.

A decisive break (and close) below this line signifies the current move is over and there’s something else at work.

Positioning

Yesterday, the LABD-22-05, position was reduced by about 8.5%, to maintain margin requirements (not advice, not a recommendation).

As has been an on-going plan for this trade, position size (in LABD) will be increased as the market allows (not advice, not a recommendation).

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

Decision Point: Biotech

To Bounce, Or Not

Final stages of the bear market?

That’s what the ‘analyst’ at this link has to say.

If you know your market history, ‘opinions’ like that were pushed out all the way down to the bottom after the crash of 1929.

As for me, I’m going with the 78-year-old money manager that was quoted saying (paraphrasing):

‘It’s the biggest bear market of my life.’

Back to the analyst above, another opinion could be (looking at price action), we’re not in the ‘final stages’ of anything … except maybe the beginning.

Before we leave the topic, IYR real estate closed at 103.84, when the ‘old-timer’ spoke. Yesterday’s close was 81.43, down -22%, from that level and down – 30.3%, from all-time highs … and counting.

The ‘final stages’ of this decline is (potentially) years, if not decades away.

Biotech Decision Point

With about twenty-minutes before the open, biotech SPBIO, is set higher with leveraged inverse (pre-market) LABD, down approximately – 1.6-pts. (-6.3%).

We’re at a decision point for the sector.

Looking at the chart of inverse LABD below, a trend (and potential trading channel) is clear.

This morning’s gap-lower open is set to test that trend.

SPBIO, Leveraged Inverse LABD, Daily

If biotech remains in its downtrend that started at the August 11th, high of 7,399.86, expectations are for some kind of upside LABD, reversal within the first hour of trade.

If not, price action then opens the door for a move above established resistance at SPBIO, between 7,400 and 7,700.

As unbelievable as that would be, it could still happen.

Summary

The first hour of trade will be watched closely.

Price action itself will define if SPBIO, has fished its down move or if we’re just confirming the trend already established.

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 Biotech Breakdown …

Massive Short Volume, Proves Correct

Short-side volume was the key.

The August 13th, update linked here, identified unprecedented volume posting on the short side.

It’s also interesting to note in the very same report, there’s a link to ‘bears capitulate’.

If there was actually some value to the financial press, this would be it; help provide contrary indicators.

So, here we are just over a month later and biotech SPBIO, appears to be in free fall.

Biotech SPBIO ($SPSIBI), Weekly Close

The prior update had this so say about positioning (not advice, not a recommendation):

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

From that August 13th update, the main account for my firm has increased the size of its short position (LABD-22-05), by approximately 34% (not advice, not a recommendation).

Summary

Unprecedented short-volume, points expectations to some kind of unprecedented bad news.

When the market goes south, bad news comes out.

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

There is no ‘Spoon’

Paradigm Shifts

We’re living in the surreal.

Only those who can ‘see’, understand it’s like something out of The Matrix.

The old paradigms no longer apply.

There is no ‘Pivot’

There never was a ‘pivot’; just like there never was a goal of 2% inflation, or full employment.

Way back in 1921, Jesse Livermore pegged it when he told Wyckoff, the whole premise of Wall Street, was to spread “deception”.

Deception is the key.

Attempting to figure out the next earnings release, the CPI or employment numbers, inflation, or what the Fed is likely to do, is to buy into the deception.

Following that deception, is the path of the amateur.

Meanwhile, back on the professional side; as early as 1909, Wyckoff discovered market prices move based on an energy and objective or their own … completely removed from any fundamentals.

A few days ago, this update, discussed how biotech SPBIO, was potentially at a pivot point and ready to reverse lower.

Well, downside reversal is what we have.

Biotech SPBIO, Weekly Close

Even though we still have three trading days left, SPBIO, appears to be confirming the right-side trading channel.

Last Week.

And … this week

With the overall markets down sharply, events appear to be set in motion to continue downside action.

Summary:

As stated in prior updates, the current trade; LABD-22-05, was initiated in anticipation of a significant break lower (not advice, not a recommendation).

On the biotech fundamentals side (not that it matters), the wheels have come off.

The top weighted equities have no P/E … a decent conclusion may be the lower weightings don’t either.

Nobody’s making any money; rates are rising and we’re heading straight into an economic depression.

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 ‘Santa Claus’ Rally

That Was it!

It’s going to be a very different place come December.

This won’t be like ’08 -’09, where all the stops are being pulled to ‘rescue’ the market.

No, this time really is different.

We can all see by now; the plan is controlled demolition.

Paraphrasing Jerimiah Babe, and Pinball Preparedness, we haven’t even got started (with the collapse) and the public’s already folding up.

What’s it going to be like when it really hits?

This past week, all the major indices have gone through some type of relief rally. Call it a Santa Claus rally because there probably won’t be one this December.

Trading Consistency

Throughout this upward correction, the case has been made over and again, only biotech SPBIO’s in a technical (and fundamental) condition that would allow it to decline farthest and fastest (not advice, not a recommendation).

Wyckoff analysis along with Livermore’s strategic approach that’s coupled with Loeb’s ‘focus’, has led us to (shorting) this sector exclusively.

Strategy, Tactics, Focus

Biotech SPBIO, Weekly Close

Looking at the far-right side of the chart, SPBIO rallied this past week. It looks like it may head higher … that is, until we put in the trend-lines.

Now, let’s put in the trendlines.

Extended trendlines show the downside potential.

We’re about to see how this works out.

Friday’s upward action in SPBIO slowed with inverse LABD, posting narrow (downside) action as well.

Ready to reverse.

Summary

Trading action in the past week amounted to reducing the position size in LABD-22-05, by about 4.6% (not advice, not a recommendation).

If and when SPBIO continues is downward trajectory, that position (shorting via LABD) will again be increased as the market allows.

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

We’ve Seen This Movie, Before

1907, 1929, 1974, 1987, 2000, 2007, … and Now

As Scott Walters has said:

It’s different this time.

It’s Worse!

That ‘worse’ part includes the adverse moves in the market.

This time around, as opposed to ’07 – ’08, they really do seem to be worse.

Which, brings us to biotech SPBIO.

Biotech SPBIO, Weekly

Just to remind ourselves where biotech is at the moment, we have the un-marked weekly chart.

This sector’s the only one (miners excluded) that’s trading below the 50-Week and 200 Week Moving Averages with a 50-wk cross to the downside.

On a weekly basis, we’re in a major long-term downtrend that looks to have finished its upside correction.

Getting closer-in on the hourly chart we have the following.

SPBIO, Hourly

What do you see?

Here’s the marked-up version.

Over and again; a fractal set-up called ‘Spring-to-Up-Thrust‘.

The zoom chart below shows that price action appears to be struggling at the resistance area (black line).

Danger Point

At this juncture we’re at The Danger Point®

Enough of a push higher and SPBIO, could continue on upward, overcoming significant technical and fundamental barriers.

However, since we’re trending lower in the longer timeframes, probabilities suggest that downtrend may be ready (or near ready) to re-assert itself.

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), The Details

Relentless Positioning For The Downside

Like a terrier on a mailman’s leg, positioning short biotech via LABD, has been relentless (not advice, not a recommendation).

This update details the current positioning via 3X, Leveraged Inverse Fund, LABD.

This is not investment advice; this site has no obligation to provide the following information.

However, as stated in the About section, one of the purposes here, is to document trade actions and results.

With that in mind, the green arrows show the locations of LABD entries for the short-biotech (SBPBIO) trade identified as LABD-22-05.

Biotech SPBIO, 3X Leveraged Inverse Fund LABD, Daily

The magenta arrow at the far right of the chart, is the ‘break-even’ point. It’s about 1.75 – 2.0 points away from the current price.

Note: This is not ‘Dollar Cost Averaging’.

Few in the industry know that ‘dollar cost averaging’ is based on a scam conducted by the bucket shops in the early 1900s.

It’s comforting to know, that method (the scam), has made its way into at least one SEC certification requirement.

There, I feel much better 🙂

One of, if not the main reason for working this trade with the current method, is the real danger this market could ‘implode’ at any minute.

We’re just one (un)planned event away from being down 20% – 50% overnight.

Biotech SPBIO ($SPSIBI), Weekly Close

The weekly close shows SPBIO to be unique among all the major indices (miners excluded).

Not even the sister index IBB, has the weekly MA cross (black arrow) to the downside.

“You Are Here”

On the chart below, the complete positioning short SPBIO is shown as the magenta rectangle.

Also shown, are measured move targets.

Looking at the potential of this trade, the reason for the dogged persistence becomes clear.

Summary

As always, anything can happen … the trade could fall apart.

That’s true.

However, probabilities for continued market downside are increasing, not decreasing.

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