Set For ‘Implosion’ … Biotech

IBB & SPBIO, at The Danger Point®

Each one in their own way, as we’ll see below.

From a Wyckoff standpoint, we’ve identified one of, if not the sector(s) most likely to decline the farthest and fastest in a bear market.

Without question, biotech contains the overriding ‘elephant’ that’s literally affecting everything else on the planet (not advice, not a recommendation).

As stated in the tag-line above, the two indices in question are IBB (large cap) and SPBIO (small cap).

IBB, has Amgen, Gilead and Vertex, as the top three while SPBIO, has more speculative (i.e., losing more money) Beam, Twist and Fate.

Index IBB has $342.8-Bil, combined for the top three while SPBIO has only $6.5-Bil, combined.

So, it makes sense the more speculative ‘cash burning inferno‘ TWST, is in the SPBIO. 🙂

On to the charts

IBB Weekly

IBB has formed a decisive resistance area as shown.

The fourth attempt which pushed above the prior three levels (and retraced), puts IBB, at The Danger Point®

Next up is the SPBIO.

It’s much weaker and thus the focus for any short opportunities (not advice, not a recommendation).

SPBIO ($SPSIBI), Weekly

While IBB, has moved higher, to an up-thrust over the past nine weeks, SPBIO during that time, has languished.

Note: The chart scales are identical. Scrolling up and down, one can visually see the weakness of SPBIO.

SPBIO, also reached all-time highs, six months before IBB.

Getting Closer-In: SPBIO

We’re going to look at the hourly chart.

SPBIO, Hourly

Those who are long-time visitors to this site will instantly recognize the set-up: ‘Spring-to-Up-Thrust

This Friday, tomorrow, is a shortened trading day.

There’s a potential we’ll have a small blip higher into the up-thrust zone.

Conversely, for 3X Leveraged Inverse Fund LABD, the potential is for a temporary move lower.

Leveraged Inverse LABD, Hourly

This is how it looks for LABD.

Note for the inverse fund, the ‘spring’ on SPBIO, becomes the ‘up-thrust’ on LABD.

Positioning

Not advice, not a recommendation

Wednesday’s downside action in LABD, resulted in the LABD-22-10, position being stopped out with an overall gain around 7.12%.

There have already been several disruptions to the company’s trading platform and data line over the past month and we’ve not even got started with market chaos.

Recall that just recently, the Canadian market went off-line for several hours. We should consider these events the ‘norm’, on a go-forward basis.

As a result, a standing order (in the market) is in place to go long LABD (short SPBIO) at the execution price of LABD @ 18.62.

That order may or may not be modified as we go into the open tomorrow morning.

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