Biotech … Possibly, FATE(AL)

Trend-Lining @ -99%, Annualized

Is biotech about to go ‘flat-line’?

It’s not just biotech.

As The Maverick of Wall St. presents in his latest video, linked herethe entire market is poised for its next leg down.

In that video, estimates for that next leg are anywhere from -30% to -90%.

Fate Therapeutics FATE, Daily

FATE, is one of our ‘three amigos‘ of the sector, SPBIO.

The daily chart shows a confirmed, multi-hit trend line that’s declining at over -99%, annualized

FATE, isn’t the only one in the ‘- 99%’, crowd

TWST, is also trending lower at -99%, and BEAM, is running a close second at -98%, annualized.

Summary

Today, Friday (mid-session), is the last trading day before a holiday weekend.

During such days, we typically have an upward (low volume) bias.

With that, there’s still just a bit more trading room for FATE to contact the right side trendline.

Of course, what happens next will be the important part.

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

‘Investors’ Buy Dip Over & Over

“Fuel” For The Downside

Once this next level gives way, carnage will (likely) reach all-time records.

Over a centry ago, Wyckoff said in his writings, it’s those on the wrong side of the bull trade, who provide the fuel on the way down.

As reported by Reuters, that downside fuel appears to be building on a massive scale.

The Fed This … The Fed That

What a colossal waste of time … that is, trying to figure out what The Fed is, or is not, going to do.

As The Maverick reports in this update, The Fed has a higher authority. It should be no surprise to any of us at this point … they’re ‘just following orders’.

Mirroring that sentiment is Dan from i-Allegedly, saying ‘This is not the bottom‘.

Part of the reason there’s so much focus on earnings, financials and The Fed, is that it’s a whole lot easier to do that, than actually getting down to work and learning price action.

That my friends, as Wyckoff said in his text Studies In Tape Reading, ‘takes many years and many losses’.

So, let’s take a look at what that ‘tape’ is telling us concerning the biotech market.

Biotech Inverse BIS and LABD

The prior analysis on IBB, is still valid.

However as was done with real estate, changing from 2X inverse to 3X inverse, the same has happened with biotech; from BIS, to LABD.

Since the overall bearish assessment has not changed, this morning’s upward move in the markets was used to re-position to a higher (inverse) leverage vehicle … LABD (not advice, not a recommendation).

The hourly charts below show the exit of BIS and the entry of LABD.

Biotech 2X Inverse, BIS

Biotech 3X Inverse, LABD

As this post is being written 12:55 p.m., EST, price action’s at the danger point.

We’re at the extreme; the risk is least but price can go either way.

Summary

Watching that action in real time, it looks like LABD wants to go higher; currently trading at 57.20-ish.

If LABD is higher, that means SPBIO, is moving lower.

Unless price action of biotech (IBB, SPBIO) and the overall markets signal a change of behavior … the bear move is still in play.

If we get a significant break lower, ‘retail’ that’s not positioned properly, will provide the majority of downward thrust energy.

It’s no different than it was in Wyckoff’s time, over a century ago.

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

Failure, Success: GLD & IYR

When A Spring Set-Up, Fails

The upside reversal (spring) set-up for gold, has failed.

When a high probability bullish scenario fails to materialize, it signals a market with potential to completely fall apart.

Nobody expects a major reversal in gold … nobody.

Yet … there it is

We’ve had the huge volume on March 8th, that looks more and more as changing of hands; from strong to weak.

Now, the apparent reversal has failed.

Anything can happen but at this juncture, the highs of March are getting farther and farther away.

Gold (GLD), Weekly Chart

Gold could always right itself and reverse from here.

We’ll keep an eye on it but let’s move on to a trade set-up that’s working; Real Estate, IYR and leveraged inverse, DRV.

Leveraged Inverse (-3X) Real Estate, DRV

The expectation for this morning’s session, was for IYR to retrace and test Friday’s breakdown.

It’s not happening … or at least, not at this point.

Wyckoff (along with Livermore) were obsessed with ‘what is’ and not what ‘should’ be.

The ‘what is’ at this point, IYR appears to be in a swift down move with minimal upside.

Trading actions have therefore been adjusted accordingly.

The chart of inverse DRV shows two entries marked as “1” and “2” (not advice, not a recommendation).

At this juncture, the short position in IYR via DRV (DRV-22-02), has been fully established.

The stop is now moved up to the session low @ DRV 37.21

Summary

At time stamp 8:10 at this link, The Maverick shows how far behind the curve interest rates are to what’s happened with Fed actions in the past.

If they repeat past behaviors, that of moving rates higher, it’s likely to be a massive shock.

The last place to be when interest rates rise sharply, is real estate; the most illiquid asset of all.

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 ProLogis ‘Connection’

Largest Cap, In The IYR

The French Connection

As with Newmont Mining in the Senor Miners Index GDX, ProLogis is the largest market cap in the Real Estate Index, IYR.

When markets ‘thin-out’, when they reach the end of a long sustained bull move, capital exits the lower caps, the lesser performers, and is thrown into the last man standing; the largest cap(s) in the sector.

In can be argued, that’s where we are now with IYR.

Friday’s Wipe-Out

As expected, because of the near thousand point drop in the Dow, YouTube’s abuzz with everyone attempting to figure out what’s going to happen this coming Monday.

The Maverick does an excellent job (linked here) of posing the question, ‘Where are we’?

He doesn’t even bother with are we in a market collapse; that’s pretty much a no-brainer. It’s the ‘where’ in the collapse, that’s the question.

Real Estate … What’s Next?

From this site’s perspective, we’ll let the market itself tell us what’s likely to happen next.

Since the focus over the past week has been real estate (IYR), let’s look at the largest cap ProLogis PLD, to get clues on the next potential action.

ProLogis PLD, Weekly Chart

First, we’ll look at the big picture.

PLD was vaporized in the last market collapse.

We should also note, it took about 12-years to get back to pre-crash levels; good ‘ol ‘buy and hold’ 🙂

Of course, a multi-year covered call strategy could have been implemented if maintaining long. With that approach, PLD could have potentially become a cash-cow.

Crash Clues

Note on the chart above, PLD didn’t just up and crash; it gave clues well beforehand.

We’ll go into those clues in a later update.

For now, let’s look at next week’s probable action.

ProLogis PLD, Daily Chart

First, the un-marked chart to show where action finished up on Friday.

Next, we see an upthrust, test and sharp reversal.

Price action finished at support and just below the lows set on Monday, the 18th and Monday the 25th.

Wide, high-volume bars tend to get tested.

So, we’re below the lows with a wide high-volume bar. That puts PLD, in spring position.

Summary

Because PLD and IYR (and the rest of the indices) finished at or near their lows, there may be some downside follow-through this coming Monday.

Price action’s the final arbiter but there’s potential for some kind of upside test in the coming week(s).

As a courtesy, the DRV chart below shows the entry location for DRV-22-02 (not advice, not a recommendation) and the current stop.

Note how liquidity has picked up over the last two weeks.

Friday’s volume of 309,800 shares, was the largest ever for the inverse fund.

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