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.
Yesterday tested the reversal from Monday’s false breakout.
David Weis used to call such action a ‘gut-check’ to see if you could hang on to your (short) position.
Even so, today could be the more important day.
The question is: Will biotech XBI, post a new daily low, confirming the test or levitate on the next (perceived) health ‘crisis‘.
Biotech XBI, Daily
It’s about fifteen-minutes before the regular open. XBI, is trading lower, giving us a hint, yesterday completed the test (not advice, not a recommendation).
If we get a new daily low, it’s possible there’s a trading channel with pivot point at Fibonacci 21-Days.
Positioning
The side bar shows an active short: LABD-25-03.
As a result of yesterday’s action, the stop on that trade has been moved higher to LABD 7.58 (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 everyone else is focused on a ‘tradable bounce’ in the S&P, with others in a freak-out on gold, back at the ranch, biotech has continued to sub-divide lower, getting weaker and weaker, still.
Note: All trades presented on this site during 2024 (ex: UNG), and 2025, have been to the short side (not advice, not a recommendation).
Biotech XBI, Weekly
The chart highlights the Fibonacci retrace levels.
A Fibonacci 23.6%, retrace is rare; markets typically like to go to 38.2%, or 50%.
If this retrace holds, it indicates significant weakness in the sector (not advice, not a recommendation).
As can been seen in the side-bar, current biotech short is LABD-25-03, with stop at yesterday’s LABD, session low (not advice, not a recommendation).
Not shown on the chart, a trading channel that appears to be in-effect.
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.
Today’s action in biotech, best describes why it’s the only active short trade; detailed here (not advice, not a recommendation).
This update gave a hint at the expectation; the ‘spring’ set-up would fail.
It was a little bit early … but here we are.
Today (as of 11:29 a.m., EST), XBI posted a new daily low, threatening to post a new weekly low.
Biotech XBI, Daily
The potential channel includes a blue dashed centerline.
A failed move whether up or down, gets the attention of The Street.
Anything can happen, XBI could recover to the upside.
However, there are three successive trendline hits on the right channel line; probabilities for downside, are higher than for up (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.
Yesterday, biotech had moving average compression; today, it’s Alcoa.
In this case, we’ll present the monthly chart, showing the long-term picture.
As we’ll see, moving average compression is rare, especially when using the longer time-frames.
In the case of Alcoa (AA), you have to go all the way back to 1978, to find a similar event.
The Big Bubble
Referring to Prechter’s analysis link here, he states that we’re [potentially], in the largest asset bubble since the South Sea, over 300-years ago.
Let’s keep that in mind. Events are happening on such a massive scale; the typical observer may not be aware of the significance and/or the rarity.
Alcoa AA, Monthly
The zoom areas are side-by-side to show the similarity.
Expanding the chart and including the wedge notation, also shows price action at the lower boundary.
It should be noted, AA, is part of the ‘Basic Materials’ sector, with tracking ETF as IYM.
Included in the IYM components, is NEM, and RGLD; this sector is correlated with the miners, GDX, GDXJ.
Positioning
It’s the trader’s discretion as what to do at this point.
This site may or may not execute a direct short of Alcoa, just as it might do with Carvana (CVNA), and maybe others (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 basic idea around Moving Average ‘Compression’:
The market’s oscillated itself over a period of time, to possible point of inflection.
In the example below, with the weekly chart of biotech XBI, this type of compression is rare.
The last time MAs were this compressed (using 50, 100, 200 EMA) was over fifteen years ago, in late 2009.
Biotech XBI, Weekly
Moving in closer, we have an obvious ‘centerline’, and then potential outer channel lines.
Fibonacci time correlations for pivot points, as noted
There’s also resistance around the 88 – 89 range, to be covered in a later update.
Positioning
As stated in the last update, the short position in biotech XBI (via LABD) is the only open position (not advice, not a recommendation).
The major indices were lower over the past week and ‘normal’ action would be some kind of upside to test.
However, as that last post highlighted, there’s (at this point) no ‘Trump Put’; there are no indications the market will be supported as was done with the ‘Fed Put’ after the ’08 – ’09, meltdown (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 last time we had a sustained multi-year meltdown (’07 – ’08), there was a ‘ban’ on short selling.
Since Trump is ‘strictly business’, will he try (or instruct the SEC) to save the market?
Based on this link, maybe not (not advice, not a recommendation).
If that’s true and there are no ‘saves’ this time around, then we’re in uncharted territory; at least since the ’87 crash.
Gold Miners ‘Bid’?
The rest of the market’s breaking down, but the miners are holding steady (sort-of). They look like there’re headed for at least one more push higher.
Junior Miners GDXJ, Daily
We’re including the MACD, to show if there’s a new high above the 53.00 – level, it sets-up a (potential) bearish MACD divergence.
This coming Tuesday, is Fibonacci Day 8, from the February 28th lows.
Positioning
The short trade JDST-25-04, was stopped out early in the session. No other shorts are planned for this sector … yet (not advice, not a recommendation).
Short trade in biotech XBI, remains active as LABD-25-02, with stop at LABD 7.44 (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.
Click on the side bar under the same name to see all posts related to this set-up.
Note: A set-up does not guarantee anything.
It’s just a market observed phenomenon that may result in a directional move (not advice, not a recommendation).
Real Estate IYR, Daily
There it is:
This is what’s called The Danger Point®
The risk of being wrong on a short position is at its least (not advice, not a recommendation).
Positioning (updates)
Biotech XBI is spending a lot of time hovering around support and not progressing downward (no matter all the Fibonacci correlations).
With that, LABD-25-01 was closed at slightly above break even (not advice, not a recommendation).
Real estate IYR was entered short early in the session via leveraged inverse DRV, as trade DRV-25-01. Stop for the trade is currently the session low. (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 Danger Point® 