Positions & Plans

Expectations, For The Week Ahead

Summarizing trading actions for the week and the action plan, going forward.

Open Positions:

Currently there are two open positions: details below.

TDA-YANG-22-01

Short the Chinese FXI via YANG (not advice, not a recommendation)

Enter YANG @ 10.95, with current stop @ 10.89

Friday’s close @ 14.05, Open profit = 28.3%

FXI, 3X Leveraged Inverse, YANG, Daily

Shown above, YANG appears to be in a trading channel (grey lines).

As a result of moving decisively higher (FXI, lower), the stop on the position is to be moved to YANG 12.79 (not advice, not a recommendation) at the next trading session.

LABD-22-05

Short the biotech SPBIO via LABD (not advice, not a recommendation)

Multi-entry LABD @ 28.11 (combined), with current stop @ 26.57

Friday’s close @ 26.98, Open loss = – 4.02%

SPBIO, 3X Leveraged Inverse, LABD, Daily

Last week contained both record daily volume (since inception) for LABD, as well as record weekly volume.

Downward thrust energy has dissipated. The down-move appears to be exhausted.

Supporting the assessment LABD is at or near a pivot point (reverse higher), we’re going to review the 3-Day chart.

SPBIO, 3X Leveraged Inverse LABD, 3-Day

Note, there is one more trading session (this Monday) needed to complete the current ‘3-Day’ bar.

First, we can see downward thrust dissipating as on the daily chart.

The prior three-day bar is identified as ‘Ease of Movement’.

It’s the first bar in the entire down-sequence starting on 6/14, where upside action was able to penetrate the prior (3-Day) bar’s high.

That’s an indication of demand.

After upside penetration, price continued lower.

However, here’s the important part, LABD, closed higher and posted a higher low when compared to the prior 3-Day bar; subtle clues a reversal may be in the works.

There’s one more trading session needed to complete the current 3-Day bar and anything can happen.

However, based on the analysis thus far, it’s reasonable to expect LABD, to continue to post higher; that we’ve reached the extreme of downside action.

The 3-Day below shows the higher lows and includes a zoom of the area.

Adding to the reversal case, on a weekly close basis, SPBIO reached underside resistance during the week of 7/8. This week just past, it closed slightly lower (chart not shown).

Summary

It’s the weekend and so we have the usual suspects of bad news … any of which could be the butterfly in the amazon, the final upset for the markets.

Just a brief list of current events, below:

Texas cattle being dumped on the market

Locomotive workers may go on strike

Child size coffins ordered in bulk.

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: Torn Between Two Forces

On The One Hand … Is Truth

Let’s start with Dr. Jane Ruby, first.

At this link she explains to the kindergarteners (who even at this late stage, STILL believe the lie), the truth about ‘The Speck’.

Go to time stamp 6:37 and watch; you can clearly see her exasperation as she has to go through it one more time.

We also have this going on behind the scenes as well.

On the other side is the continuous stream of fear propaganda. Just go to your local TAAS (sorry, FOX) news outlet to hear the latest lie du jour.

With that in mind, let’s go straight to the index for the day, biotech SPBIO.

The last analysis proved to be flat wrong.

There was a breakdown as anticipated but that move did not follow through. It was the precursor to an up-leg which is where we are now.

Biotech SPBIO, Weekly Close

It’s obvious.

Last week was a test of the resistance (blue line).

Thís week started with biotech sharply lower (early today) but then coming back to test … where we are now.

That test is starting to reverse late in the session (around 3:00 p.m. EST).

Let’s go straight to the inverse fund LABD

SPBIO 3X Leveraged Inverse LABD, Daily

A very tight wedge has formed.

Price action attempted to break out but has come back for a test. This is where risk is least (not advice, not a recommendation).

Positioning

The Basic Materials short (SMN-22-01), while profitable, was not going as planned. That position was exited at SMN 14.29 … you can see it as the low of this session on your trading platform.

SMN 14.29, is me 🙂

That capital has now been used to position short biotech, SPBIO at LABD 27.58. trade LABD-22-05 (not advice, not a recommendation).

The current stop is the low of the day @ 26.98.

Summary

Even as this post is being generated LABD is pulling away from the lows. With about one hour left in the session, it’s at 28.18.

The LABD entry was an initial position; there’s plenty of capital left to increase the line if trade conditions warrant.

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 Mid-Session, Update

One Last Low, For LABD

Yet another low for inverse LABD.

Is this trade set-up still viable and/or worth the pursuit?

Short answer (at this point) is yes, and yes.

We’re going to look at the tape (the chart) and let it tell us what’s happening from a Wyckoff analysis perspective.

Since we’ve just past mid-session (12:37 p.m. EST), we’ll use the 4-Hour chart.

Biotech SPBIO, Leveraged Inverse LABD: 4-Hour

The unmarked chart above, looks like a mess.

Volatility everywhere in the past four sessions; including the Fed announcement on June 15th.

The marked-up chart below shows two distinct 4-Hour reversal bars.

Each of those bars were subsequently penetrated to the downside thus negating any entry signals.

However, it’s the next chart that draws from the secrets of Wyckoff analysis.

That is, “Shortening of the thrust”.

Discussed by David Weis in his training video, when thrusts become shorter, probabilities favor we’re nearing the end of the move.

As shown below, net downward thrusts on the chart have narrowed significantly.

Note that each downward thrust has successively less energy as shown on divergence of Force Index.

The next chart zooms-in.

Positioning

Based on the above, as much as price action gives the appearance of moving lower for LABD (higher for SPBIO), the energy to do so, appears to be spent.

Obviously, the accounts being managed have gone through a draw-down over the past trading sessions.

One account was stopped out @ 44.58 and then re-positioned at 44.01. The other account was allowed to draw down (not advice, not a recommendation).

The LABD-22-04, trade remains intact.

Summary

If the trend remains down for SPBIO, it’s highly unlikely the index will make new daily highs beyond this session.

If it does, then we can consider the trade set-up invalid.

A reasonable stop location at this point for inverse LABD, would be near or below the lows for the day (thus far), currently @ 42.37 (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

Solstice Reversal

Let’s Not Forget, S&P Bottom @ 666.67

The S&P bottomed out at 666.67, on March 9th of 2009.

Putting it differently; that’s 3/9/09.

When that ’09, bottom is discussed in the financial press, they quickly round it up “667”; nothing to see here.

Market Reversal

The S&P needs to print a new daily low to make it official but our chief cook and bottle washer, biotech, looks like it’s not waiting around.

Pre-market action in (inverse) LABD is already at a new daily high, corresponding to a new daily SPBIO, low.

Once again, the short position was exited during the last session and then re-entered (discussed below) towards the end of the day (not advice, not a recommendation).

Trade LABD-22-03 is closed out; LABD-22-04, now open.

Biotech SPBIO Inverse Fund LABD

The chart shows pre-market action is at this juncture; Fifteen minutes before the open.

The hourly chart below has entry detail along with the current stop.

LABD Hourly

Positioning

With the market to open gap-higher (SPBIO, gap-lower), the first order of business is likely to be an attempt to close that gap.

If there’s going to be an attempt, look for it within the first 90-minutes of trade.

From my firm’s standpoint, the actions are obvious: We’ll be looking to increase the LABD-22-04, position and continue to have a tight stop (not advice, not a recommendation).

Summary

Anyone accessing this site for any length of time is most likely, fully awake.

Go ahead and look up “June 21st” on this calendar; it all makes sense.

If this reversal ‘sticks’ and is the pre-cursor to much lower levels, we know ‘the enemy’ has not changed.

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 … Bulls/Bears

Fight Between Support & Resistance

Last Friday’s action was volatile with the op-ex short-covering apparently coming into play. Biotech was affected more than any other index.

If it really was short covering, then we already know what’s likely to happen next.

First, we’ll go over the charts and then build a case for the next probable direction.

The focus is on SPBIO, instead of IBB, as it’s the weakest of the two indices.

From a weekly standpoint, this is where SPBIO, left-off this past Friday.

Biotech SPBIO, Weekly Bar

Adding the mark-up to show we’re at support and resistance.

Getting closer in on that area.

We can see based on the price action itself, we’re at an important juncture.

Two years ago, in March of 2020, price action formed a support level.

Fast forward to now.

Price action bounced off that same level, attempted to move higher (for over three weeks), was rejected, moved lower, and last week, came back up for an underside test.

Most Probable Direction

If there was a short squeeze as a result of options expiration, fuel for that move is gone.

The options have expired.

in addition, that fuel was only able to get SPBIO, to the underside of resistance.

So, you can see where this is going.

Upside fuel is gone. SPBIO, is currently at underside resistance; most probable direction is down.

Measured Move

If the action from all-time highs during the week of February 12th, 2021, to the current support/resistance area is a trading range, then we may have a ‘Measured Move’ target as shown.

Under the current conditions, i.e., financial, societal, collapse along with the ‘elephant‘ going mainstream, a downside objective that’s an – 85.6%, decline from all-time highs, is entirely reasonable.

The 3X Inverse LABD, Weekly

The unmarked chart

First, the rule of alternation.

Last time is not this time.

Last time there was a reversal bar and the next week continued lower, then lower again and so on.

The rule of alternation says, whatever happened last time will not happen this time. Price action will (likely) have a different form.

Obviously, if the short squeeze referenced above is over and the trend remains down, one could expect LABD, price action to be higher at the next session (SPBIO, lower).

Positioning

The weekly chart shows progression and location of the stop orders on LABD-22-03 (not advice, not a recommendation).

The initial stop has been moved up to last week’s low.

There may be a trading channel as well.

Potential exit target(s) if not stopped out, would be contact points at the upper channel line.

Summary

If the position is stopped out at the next session, we’ll re-evaluate.

If not, and SPBIO, continues to move lower (LABD, higher), we’ll be looking for additional confirmation of the right-side trend line and the next likely area to move the stop.

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

Retail Investor … The Apocalypse

Mass Psychosis, At The Edge

Even before we had gone around the room to introduce ourselves, the instructor at Online Trading Academy, Dallas, said he had a important topic to cover.

He wanted to make sure everyone understood the concept. The rest of the seven-day course hinged on the understanding and acceptance of the idea.

What was it?

You may have already guessed: ‘Short Selling’.

The big money is made on the downside … not after, when the bottom is in, although that may happen as well. No, it’s the downside that has the greatest opportunity for profit.

Fear is a much easier emotion to gauge than greed; in that sense, down is easier than up.

Short Selling: Market Trading 101

You would think it’s a no-brainer; that everyone knows this.

Not so.

Years ago, while discussing the markets with a former broker, he asked me, and I quote: “What’s an inverse fund?”

During a business lunch, I asked another broker if he worked the downside for his clients. The response was “They can’t handle the volatility”.

In his case, he knows the vehicles are there (inverse funds) but he doesn’t use them; only working the upside.

Shorting The Market

My first short sale was back around 1995.

I shorted ‘against the box‘, when you could still do so. The short trade was Alcide.

In the May 1993, edition of my newsletter (see About) ‘Market Order Letter’, published by my firm, Equity Research Corporation, Alcide received initial coverage.

Prior to that edition, I managed to get a phone interview with Mr. John Richards, Vice President, and Chief Financial Officer of the company.

Remember that I was simultaneously employed as Engineering Technical Manager, for an avionics company. So, the interview was performed on my lunch hour.

During the call, I had made it past the receptionist, then secretary, and then to Mr. Richards, specifically.

Initially, the interview was not going well.

I could tell he considered me an annoyance and rightly so. That was, until I mentioned the competition and how they were going to deal with that.

At the time, Isomedix, had a plan to irradiate chicken (carcasses) to prevent salmonella. Conversely, Alcide had a product that was sprayed on (i.e. low-tech) and biodegradable.

When I mentioned Isomedix, the tone of the conversation changed instantly. I had done my work; I knew the market and wasn’t some newbie (even in ’93).

Mr. Richards opened up and gave me a fantastic interview discussing all manner of things. I did not tell him I was on my lunch hour and in the end, had to politely say, ‘You must be busy, so I’ll let you go’; thank you for your input.

Alcide (ALCD) was a ten-bagger that ultimately went from about $3/share to above $60/share (actually, a twenty-bagger) before being acquired by Ecolab.

Which brings us back to the ‘Retail Investor’

Still Buying The Dip

One more thing about the trading class mentioned above.

After the short-selling topic was covered, the instructor went on to say, the fact we were sitting in that room, separated us out from the massive herd of ‘investors’.

At that time, there were about 40,000 – 60,000 professional traders in the U.S. Although still neophytes, we were considered in that group.

That’s 60,000 out of 240-million adults, putting the ratio at around 0.03%

Now, on to ‘the dip’.

This article out from ZeroHedge has the data saying, ‘Retail’, is still buying the dips although the average portfolio is down a whopping -34%, for the year.

Without getting into specifics, the most conservative account managed by my firm is up over 30%, for the year, which includes the LABD, whack from this past Friday.

Note: An updated analysis of Biotech SPBIO, inverse LABD, and LABD-22-03, is scheduled for tomorrow.

Fuel, For The Downside

Over a century ago, Wyckoff wrote about the behavior of those on the wrong side of the trade.

That is, they are the ones who provide the fuel for the next move. In our case, that would be fuel for the downside.

Investors are buying the dip, because that’s all they know how to do.

It’s a sign of desperation.

Hoping that somehow, the markets will pull them out and return things to ‘normal’.

If you’ve read this far, you already know, ‘normal’ is gone.

Whatever happens next, (except for the starvation) will be completely new.

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 … Squeeze or Test

Maybe, Both

If we look at it from the perspective of an up-thrust test, as we’ll do below, such tests if they don’t fail are the precursor to dynamic moves.

At the minimum, today’s action allows the stop to be moved on short position LABD-22-03 (not advice, not a recommendation).

It’s interesting, the biotech sector both IBB and SPBIO, with inverse funds BIS, and LABD, respectively are the only ones taking a major hit today.

Using a cue from Nicolas Darvas and his observations (as a dancer), the market will initially go opposite its main direction as if to get ready for the move; like a dancer crouching down before lifting the female partner.

That may or may not be the case now, as we’ll see below.

Biotech SPBIO, Weekly Chart

Next, we’re going to invert the chart (to mimic inverse LABD) and then label the up-thrust as a Wyckoff ‘Spring’.

Biotech SPBIO, Weekly Inverted

Next, we get closer to the action as shown.

Is the ??? area, a test or a failure of the set-up?

The short answer with about 90-minutes to go before the close, is unknown.

If SPBIO, closes down for the week, painting a red bar, probabilities are to the downside.

Closing higher for the week starts to bring a potential failure of the trade into question.

Summary

No matter what happens, the stop on the short position via LABD is going to be moved to the low of this session; currently LABD 49.90 (not advice, not a recommendation).

We may get into speculation later, on why biotech seems to be the only index in a major squeeze, preparing for downside.

Some who monitor this site, and those ‘awake’, may already have a good idea as to the potential why.

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

A War of Attrition

To Survive, Prosper, You Need To Have The ‘Stomach’

There’s nothing like the Vietnam war to remind us, the enemy on their home turf has the advantage and can exercise a war of attrition.

Similar to the Soviets in Afghanistan; the natives, the Mujahideen, wearing down the invading army month after month and year after year.

The Oligarchs and The Proletariat

Day after day, another food processing plant burns down; another fertilizer train mysteriously derails, a natural gas facility unexpectedly blows up.

‘So it goes’, as Vonnegut wrote.

Americans, except for a few, don’t have the stomach for discomfort. The Depression-era generation is long gone.

However, this site, is for that small few.

As can be seen with the above ‘events’, we’re in a long-term chess game. Adding a potential twist is this video at time stamp 12:50; seeds may now be dead-on-arrival.

Is the typical money management firm, or market analysis YouTuber, taking all of this into account?

Or are they still talking about ‘due diligence’, ‘fundamentals’ and what The Fed ‘has to do’?

A good number, if not the vast majority of these firms, may be on a course for self-destruction.

More chaos to come as that industry gets crushed.

With that, let’s review why there’s been so much focus on biotech and specifically, SPBIO.

The Major Indices or ETFs

As of yesterday, Friday, this is where the major indices stood in relation to all-time highs or ‘recovery’ highs.

Listed from smallest percentage loss to the largest.

Biotech SPBIO, has been down five quarters in a row and is working on the sixth.

Because of last week’s action, the sector may be poised for its most dramatic part of the decline (not advice, not a recommendation).

We’ve had an on-going analysis of the sector with recent links provided here, here, here, and here.

Positioning

If we’re about to have a market implosion in the coming week(s), SPBIO, has already set itself up to be the downside leader (not advice, not a recommendation).

That doesn’t mean ‘straight-down’, although it’s always a possibility.

The most likely price action is more SPBIO downside (LABD, higher), with some oscillation in the accumulation area shown on leveraged inverse LABD, below.

SPBIO, 3X Leveraged Inverse, LABD

Un-marked chart

Potential zone for oscillating price action.

Now, adding the trading channel, we see the possibilities.

In the coming week, there’s also the potential for a ‘test’ where SPBIO, rises and LABD, declines.

However, from an empirical standpoint, when a Friday has a violent down move that closes near the low, it increases the odds for downside follow-through the coming Monday.

Positioning

The data below is taken from one of the accounts trading this market. It’s provided as a courtesy; showing entries and exits as the trade, LABD-22-03, unfolds (not advice, not a recommendation).

The expectation is for price action to allow the position to be increased based on more biotech downside.

With the Fed meeting due up this week, it’s going to be interesting.

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 … ‘Brace for Impact’

Downside Leader

From the outset of the bull market’s end, biotech has been the downside leader.

Of the two indices being tracked, IBB and SPBIO, the latter of the two, is the weakest.

Over the past several weeks, it’s been like a terrier on a mailman’s leg concerning positioning short this index (not advice, not a recommendation).

In the end (as we’ll see below), it turns out that waiting for an actual penetration, print, and close above resistance, was the best approach.

Now, it’s obvious, we’re in a reversal.

The unfortunate part from an economic standpoint, this could be the next big leg lower.

Biotech SPBIO, Daily Close

Penetration and close above resistance (blue line).

Then, price action retreats below resistance and back into the trading range; Wyckoff, Up-Thrust (reversal).

It’s important to note, if SPBIO closes at this level or lower, the prior analysis of ‘grinding to a halt‘ on a weekly close basis, remains valid.

Positioning

Right or wrong, the short position LABD-22-03, was never fully exited (not advice, not a recommendation).

Everyone has their own style.

From a personal standpoint, I despise ‘chasing’ the market. Chasing is for the lazy or frightened who are too afraid to pull the trigger. No thank you.

In fact, the LABD-22-03, position was increased near the end of yesterday’s session.

The intuition, the gut feel, if you will, was ‘This sector’s going to reverse. When it does, it’s going to reverse hard’.

With today’s pre-market action (about fifteen minutes before the open), LABD, trading higher by 3.10-points, or +6.35%, that intuitive assessment is proving correct.

At this point, an obvious stop level would be yesterday’s LABD, low @ 45.77

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 … ‘Hold the Phone’

Danger Point … Print, Danger Point … Close

First, biotech SPBIO, ‘printed’ into the danger point.

The next day (yesterday), it ‘closed’ into the same region.

The charts below show where things left off at that close.

As is frequently done, farther down, we’re going to invert the chart to show price action similar to the leveraged inverse fund LABD.

Biotech SPBIO ($SPSIBI) Daily Close

Adding zoom for more detail

Next, we invert the same chart to show how it looks going short via LABD (not advice, not a recommendation).

Biotech SPBIO ($SPSIBI) Daily Close … Inverted

We can see that price action has been in a similar set-up before; just prior to a significant decline (non-inverted).

Summary

Obviously, Monday’s print into the danger point was taken as the set-up for a reversal. That reversal appeared to be taking hold based on that day’s price action.

Yesterday, reversed the reversal but then wound-up printing and closing into a danger point; an up-thrust condition on the standard chart and a spring condition when looking at it on the inverted scale.

Positioning

As was done in prior action, the position size in LABD, was reduced as price retreated (not advice, not a recommendation).

However, the position was not exited entirely.

Pre-market action has LABD, trading higher about 1-point or 2.0%. This behavior is consistent with a potential reversal.

Today’s close is the important part.

Higher for LABD, and we’re in a potential reversal for a significant move; lower and it’s time to exit completely and stand aside (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