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.
According to this, just out on ZeroHedge, that’s what’s happened.
As we’ll see below, there’s certainly something unprecedented going on, specifically in biotech.
The prior update made the argument, biotech SPBIO, has a unique distinction that’s showing up on the leveraged inverse fund LABD, shorting the sector.
For illustration purposes, we’re going to do a little ‘trick’.
The weekly close of SPBIO, is shown below.
This index does not provide volume but we’re going to ‘fix’ that by putting in the lower panel, weekly volume for leveraged inverse fund LABD.
It’s clear, as SPBIO reached all-time highs and reversed, short activity via LABD picked up significantly.
However, the past several weeks tells us from a Wyckoff perspective, something major could be about to happen.
As SPBIO, has moved counter-trend higher, activity going short (via LABD) has gone off the scale.
Spring-To-Up-Thrust
If the unprecedented volume activity weren’t enough to draw attention, we also have a repeating set-up that’s well, repeating; Spring-to-Up-Thrust.
With the idea originally obtained from the late Daivd Weis, later confirmed time and again, it’s a unique (high probability) characteristic of market behavior.
That’s where we are now.
SPBIO: Up Close & Technical
It may be hard to see in the above chart.
The next one, moves closer-in.
The upward advance of SPBIO slowed dramatically last week, closing up just +1.68%, for the week.
Contrast that move with the week prior at +13.83%, and the slowdown is evident.
All Hands, On Deck
Figuratively speaking, everything’s been dropped to focus exclusively on this sector. It’s obvious, what’s going on at this juncture is unprecedented.
That goes for the rest of the markets as well.
However, this sector alone, is telling us to ‘look here’; potentially setting up for a major reversal.
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.
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 that’s where we are now (a big if), price action SPBIO, will not stay at elevated levels long.
Summary
If we’re in yet another shakeout, the expectation is for price action to retrace the opening gap higher within the first hour of trading.
How price action behaves if/when that happens will help determine if we’ve had a failure; SPBIO, heading much higher or one more shakeout before lower levels.
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.
Sometimes you feel like an idiot and sometimes you don’t 🙂
Question: How do you know where the market’s going to go?
Answer: Put in your stop; that’s where it goes.
The stop level mentioned in yesterday’s update was not physically placed in the market but a mental identifier; indicating if the LABD trade was subject to failure.
As if on cue; no sooner was the stop posted than today, the market heads right for it.
In or Out
With the level being tagged so easily, it means that one’s thinking is right along with the amateurs, doing the same thing. Ouch.
So, price action penetrated the LABD 26.50, lows.
It’s what happened next that’s important.
It took less than one hour for LABD, to reverse off the lows and begin to print decisively higher.
Therefore, we just witnessed a run on the stops.
At the trader’s discretion, LABD-22-05, was maintained throughout the stop-run process.
The hourly chart of 3X Leveraged Inverse Fund LABD, provides detail; note LABD got itself back above an existing trend line.
SPBIO 3X Leveraged Inverse LABD, Hourly
Time is approximately 2:11 p.m., EST
Typically, a ‘bump-and-run’ move like this signals the kick-off for price action.
Summary
Biotech appears to have gyrated enough at the extremes to frustrate both the bulls and bears.
With today’s run, we may now be ready for a directional move; LABD to the upside.
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.
Biotech has similar price action to gold (GLD), back when it changed hands (link here).
The 3X Leveraged Inverse Fund LABD, shows the detail.
SPBIO, 3X Leveraged Inverse LABD, Daily
The message of LABD, is straightforward if you know where and how to look.
We’ll start first, with the un-marked chart.
The record volume spike is obvious and noted below.
Immediately after the record volume, LABD shows a change of character; it’s reversed to the upside.
The next chart points out that LABD, just finished three consecutive up closes with heavy volume.
There have been higher single day up volume(s) but not ever three in a row at this (elevated) level.
The inference: This reversal is or has potential to be significant.
Summary
Starting on July 12th, and all through the reversal, a short position (LABD-22-05), has been and continues to be accumulated (not advice, not a recommendation).
There have been minor adjustments (small exits) throughout, but the core position has been maintained and increased as the market allowed.
As long as LABD, price action remains agreeable, stays calm, potentially ratcheting higher, the plan is to continue to increase the position until volatility or hitting the stop prevents further action.
Current stop is now located @ LABD 26.21 (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.
With a new daily low printed for biotech SPBIO, we’ve got confirmation of yesterday’s sell signal (not advice, not a recommendation).
To show that biotech is the weakest of them all, an updated chart (below) has the major indices ranked in order of downside action.
Prices as of 11:12 a.m., EST
Index Table
It’s a no-brainer (almost).
Even with the recent rebound, SPBIO remains the weakest.
From a Wyckoff standpoint, if one is going to short the market, his approach was to select the weakest sector(s) as they’re likely to fall farther, faster.
It’s the complete opposite of the amateur who spends his time trying to pick the top of the highest flyer.
We’re interested in opportunity; not bragging rights.
Let’s go straight to the 3X Leveraged Inverse Fund LABD, hourly basis.
SPBIO 3X Leveraged Inverse LABD, Hourly
Slowly but surely, LABD is competing the spring set-up and testing action.
If you’re not looking, it’s nearly imperceptible.
However, we’re still at the stage where the test can fail. We’re still at The Danger Point®
A reasonable soft-stop would be today’s low @ LABD 26.21, with a hard stop at yesterday’s low @ LABD 24.60
‘Soft-Stop’ meaning, if it’s hit, probabilities of trade failure have just increased significantly.
Summary
As can be seen on the side-bar, we’re short this sector with LABD-22-05, and TDA-LABD-22-02 (not advice, not a recommendation).
If price action continues to proceed as expected, the next update will show a repeating trendline that’s sure to catch one’s breath.
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 what may be just the beginning of similar actions, is this the pivot point?
Part of a lawsuit’s process is ‘discovery’. That’s probably the last thing any ‘institution’ wants.
ZeroHedge picked up the news, linked here; the comment section is telling.
Potential for a significant reversal in SPBIO, has been on the radar for about three-weeks.
What’s price action saying at this juncture?
SPBIO, Daily
For starters, within the first hour of today’s session, we’ve already had an ‘outside-down’ print; last session’s highs and lows have been exceeded by today’s action.
Shifting gears for the next chart, we’re looking at 3X Leveraged Inverse Fund LABD.
LABD, Hourly
The Wyckoff spring set-up is clear. The testing discussed in this update, is per-the-book for Wyckoff action.
‘Tests’ can always fail.
That’s why it’s called ‘The Danger Point’. It’s the location where the risk of being wrong is least (not advice, not a recommendation).
The next chart, also LABD, highlights the record volume on two time-frames, daily and hourly.
This is a potential ‘changing of hands’ from weak to strong for the short-side on SPBIO.
It should be noted, last week’s volume for LABD, was also a record, making it three time-frames.
Summary
As this post was being created, LABD continues to rachet lower into what is now a deep test.
Currently trading at LABD 25.98 (mid-session), we’ll see if the test holds and LABD finishes higher for the day.
Meanwhile, the fundamental backdrop and pressure continues to build.
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 Danger Point® 