When looking at biotech sector (SPBIO) on a close basis, today’s action stopped just short of making a new closing high since the up-thrust (reversal) of October 28th.
Effectively, it’s a test of that reversal.
On to the analysis.
SPBIO, Daily Close
We’re going to put the chart below with no mark-up; then invert to show the potential trade set-up.
SPBIO, Daily Close, Inverted
Now, we’re inverted and marked to show penetration below support and then, today’s test.
The zoom gets closer-in.
The market is stretched, no doubt.
In a way, it’s a good thing. Either the test will hold and SPBIO, will decline from here (in earnest) or there’s something else going on and we’ll exit to look for another trade (not advice, not a recommendation).
Positions, Market Stance (courtesy only, not advice).
LABD-22-09:
As stated, in the prior update, LABD-22-09, position size was reduced during the session by about 10%.
Special Note:
This sector and leveraged inverse LABD are highly volatile. Character of the market can change at any time.
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.
It looks bad for being short biotech and maybe it is.
However, as we’ll see below, the leveraged inverse fund LABD, could be completing its reversal set-up.
While today’s thrust higher in the overall markets was not unexpected (shown here and here), one should take note of the violence.
As of this post, from yesterday’s low to today’s high, the Dow has moved over 1,000-pts.
It’s what happens next that’s important.
Weak shorts are probably terrified, have covered, now wondering what went wrong.
So, let’s take a look at the short position on biotech SPBIO, and see if it really is ‘wrong’ (not advice, not a recommendation).
SPBIO, Leveraged Inverse Fund LABD, Daily
What we can see (above) is that LABD, is following the Wyckoff Schematic near exact for a spring set-up.
It’s just that today’s move is especially sharp and so one would think the set-up has failed … not so fast.
Another reason to think we’re completing a test of the spring, is below. Today is Fibonacci Day 34, from the high (low on SPBIO), set on September 26th.
We also have a potential trading channel as well.
As this post is being created, LABD is hovering at its lows; currently (as of 1:30 p.m., EST) trading at 19.89
Summary
Yesterday was an important day but it was not obvious, and not (yet) directly related to the markets.
A report was released on ZeroHedge (link here) which essentially confirms what some of us in the proletariat have known for years … if not decades.
It’s now out in the mainstream.
How long before the ‘elephant’ makes its way there also?
If indeed we’re at a reversal test of biotech and if that test passes (SPBIO downside continues), the move has the potential to be historic.
Positions, Market Stance (courtesy only, not advice).
LABD-22-09:
Price action blew through the stop located at 20.21 and is now hovering at those levels. The LABD position is being maintained but will likely be reduced in size as we head into the close (not advice, not a recommendation).
Special Note:
This sector and leveraged inverse LABD are highly volatile. Character of the market can change at any time.
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.
That first link even shows how far GLD, is likely to go, which at this point, is just ticks away.
Gold GLD, Daily
We’ll start first with the original forecast.
And the result (as of 1:20 p.m., EST).
We can see price action nearing the up-thrust (reversal) location.
Note: Penetration to the upside above resistance, does not necessarily mean it’s a short opportunity.
Any opportunity will be determined by price action itself.
Summary
Wyckoff analysis not only can provide potentials for price movement; when that move happens, it can also be a stabilizing factor so that one is not caught up in the usual media hysteria.
Meanwhile, back at the ranch, biotech sector (SPBIO) is still on track (ever so slowly) for a potential sustained move to the downside (not advice, not a recommendation).
Positions, Market Stance (courtesy only, not advice).
LABD-22-09:
Special Note:
This sector and leveraged inverse LABD are highly volatile. Character of the market can change at any time.
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.
There’re a lot of moving parts to biotech and it’s like a game of chicken.
Is there going to be another ‘planned’ event pulled out of the bag that requires ‘protection’ or will this side (and this one) win-out before that happens?
Price action’s always the final arbiter and right now, it’s positing lower.
Gold:
Gold (GLD) ‘blipped’ higher on Friday and the usual suspects are out touting the hyperinflation narrative.
Owning (some) precious metals seems to be a good thing.
However, the public constantly knee-jerks into this sector and is absolutely rabid in their behavior (i.e., silver stockpiles are running out!!!).
It suggests at least, there’s something else afoot.
Prechter published in the early 2000’s, Central Banks, are followers, not leaders. The fact they are buying gold at this point, may be a contrary indicator.
Talk about going against the herd. 🙂
Over and again, it’s the boring (does not generate ‘clicks’) food supply first, then gold and silver (not advice, not a recommendation).
Real Estate:
What can be said?
It’s the largest manufactured bubble in world history and it has already popped.
Thinking it’s all going to sort itself out in a year or two is delusional. We’ve probably got decades of bear market.
Tesla:
Anyone with an anode of research capability, knows the whole EV premise, is based on a falsehood.
However, that fact is probably not what’s going to bring Tesla (and the rest of the market) down.
Let’s stop for a moment and consider the above link which has been available for nearly four-years.
How many views? Just 9,824 (as of this post)
That equates to only 0.003% of the U.S. population.
As the global supply chains implode, getting parts and having stable infrastructure (i.e., electricity) will probably be the defining factor.
Now, on to the charts.
Biotech SPBIO, Daily Close
The following sessions will let us know if we’re at the right edge of the downtrend line.
We’ve already had an up-thrust reversal and a test of that reversal. last Friday was lower … probabilities point down.
Gold GLD, Daily
Looking at the chart on the strategic, longer term, Friday’s blip is hardly noticeable. We’ve already presented how this could be a minor up-thrust (reversal) in itself.
To keep the upside intact, price action must remain and continue above current levels.
Real Estate IYR, Daily
Real estate may be working its way into an up-thrust condition. As shown, Fibonacci Day 21 from the October 13th, low is this coming Thursday, the 10th.
According to the Economic Calendar there are several potential catalysts that may push the price above resistance (temporarily).
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.
Of course, the already hammered bond market (TLT), got hammed some more.
It’s what happened next, and what’s happening today, that’s important.
That is, the sell-off was quickly reversed (to the upside) with that upside continuing this session.
The bond supply is being absorbed.
So, what does that mean?
It’s possible, the bounce, melt-up, squeeze or whatever one wants to call it could be over. There may already be a ‘flight to safety’ if there’s such a thing these days.
But let’s not hypothesize on what could be happening. The market itself (price action), tells us.
Bonds TLT, Daily
At about mid-session, this is where we are.
We’re right at the downtrend line.
The attempt to mover lower (yesterday), has been rejected.
As a result of today’s new daily high, the stop on position TMF-22-01, has been moved up (not advice, not a recommendation).
So, we’re now between the downtrend and the ‘rejection’; something’s likely to break.
Summary
The S&P (SPY) just posted an up-thrust reversal early this session and is still moving lower as of this post.
Keep in mind, all of this is happening before any Fed announcement … as if the market has already decided.
A quick note on biotech, SPBIO.
Position size has been increased in SPBIO, leveraged inverse LABD, as shown below (not advice, not a recommendation).
This sector remains at The Danger Point®
If the bounce really is over, biotech is likely to get hit the hardest.
Positions, Market Stance (courtesy only, not advice).
TMF-22-01:
Entry @ 7.166, Stop @ 6.77***
***, Indicates change
LABD-22-09***
Entry @ 19.88, 19.71***, Stop @ 18.69***
Note: Positions may be increased, decreased, entered, or exited at any time.
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.
It’s either a short-term trade or a strategic reversal.
On the strategic reversal side is this just out from ZeroHedge.
‘Inflation’ may have peaked; where have we heard that before.
However, the charts presented in that link, do show we’re at an extreme.
If we look at the TLT, price action itself, which is impulsive down, we’ll go with the short-term first (not advice, not a recommendation).
With that, Friday may have been the ‘test’ from our capitulation model.
The weekly chart of bonds TLT, shows the anticipated up-tick in MACD, as well as the measured move target from the terminating wedge.
Long Bond, TLT, Weekly
Note, the wedge has not (yet) broken to the upside … we’re still at The Danger Point®, where the trade could fail.
If we look at the daily chart, probabilities point higher.
Long Bond, TLT, Daily
If this past Friday was the ‘test’ of the move, the retrace was a very weak Fibonacci 23.6%.
A new daily high in the next session(s), will help to confirm we’re headed higher.
Positions, Market Stance (courtesy only, not advice).
TMF-22-01:
Entry @ 6.705, 7.166***, Stop @ 6.68
***, Indicates change
Note: Positions may be increased, decreased, entered, or exited at any time.
Summary
If bonds continue to move higher, with rates heading lower, what’s going to happen to real estate, IYR ?
The wheels of the real estate crash have already been set in motion. If bonds rise, rates fall and IYR moves higher, there are specific targets to watch for short opportunities.
We’ll discuss those targets and more, in the next ‘The Market Set-Up … This Week’
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.
Not to be outdone, we have this ‘me too’ melt-up article as well.
Let’s not forget, all the ‘Fed must do something’ rumors and feigned concern by its members.
If anyone really wants to know the big picture, the overall plan (a wide majority do not), this interview may be the best explanation to-date.
With all of that, we certainly could get some kind of rally in the coming week. We’ll let the price action speak for itself.
As a reminder, Wyckoff analysis does not concern itself with press releases, rumors or ‘fundamentals’; Wyckoff himself, determined based on price action alone, they have no material effect on market movement.
In his words, ‘other forces are at work’, and it’s those forces that interest us.
Gold & Silver
As said in this update, gold (GLD) was just ‘ticks’ away from posting a new monthly low. In fact, it got just 0.24-pts, from a new low before rebounding.
Of course, each time we get any kind of rally in the metals, there’s the usual hysteria. Even though for the past seven months and counting, those rallies occur at lower and lower levels … i.e., a bear market.
Shown below, it’s in a trading channel with price action at the right-side channel line.
Gold (GLD) Weekly
The chart below gets closer-in.
From left-most contact point on the channel to the initial contact on the right side is a Fibonacci 13-weeks.
Also note, the weekly high posted at the center line is a Fibonacci 5-weeks from the left-most contact.
Highly emotional markets tend to adhere to Fibonacci until either the emotion wears off or ‘everybody’ recognizes the structure.
Obviously, to keep the channel intact, a lower open (and lower action) at the next session is needed.
Looking at the daily chart of TLT below, Friday’s level of (down) volume has occurred only three times in the past three years.
Each time, there was a near immediate rebound or in the case of March 2021, the rebound came several weeks later.
Bonds (TLT) Daily
Moving in closer, we see the possibility of an ‘island-gap’ at the next open.
What could drive capital into the bond market?
Well, how about a ‘shock’ or continued market melt-down (not advice, not a recommendation).
A quick check of the local newsfeed (as of 12:45 p.m., EST) shows nothing on the horizon other than usual nuclear attack threats, power outages, child mutilation protests, marauding bears and the disarmament of Canadians.
Nothing to see here …
Real Estate
There is no mistake, events in real estate are happening at the fastest pace in recorded history.
As Scott Walters put it, over 10-million people bought into the ‘work from home’ hype and got themselves instantly (nearly) upside down in their transaction.
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.
We’re going to use the chart from yesterday’s post to set the stage for getting closer-in.
This past Friday’s early morning ‘spike’ is barely visible; the 30-minute (inverted) chart below, has more detail.
SPBIO, 30-minute (Inverted)
Price action rejected the lower levels (higher on SPBIO) and pulled away throughout the session. That ‘pulling away’ continued on, all the way into the close.
That’s a clue there may be follow-through at the next session.
If the early session opens ‘gap-higher’ (SPBIO, lower), into the resistance area (four magenta arrows, hourly chart), it would be the fourth time pressuring at this area; markets rarely hold a fourth attempt.
Summary
Of course, other markets are being watched like real estate (IYR), Tesla (TSLA), and even Basic Materials (DJUSBM), a potential sleeper for significant downside.
Updates are planned if/when low risk shows up.
Positions: Current Stance (courtesy only, not advice).
The following is the positioning of my firm’s main (largest) account.
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.
An immense flood of data; research reports, lawsuits, expose articles and anecdotal evidence; every day, multiple times a day, something new.
Has the biotech technical (finally) lined up with the fundamental?
Those fundamentals are farther down but first, we’ll discuss the technical.
As a reminder, sometimes charts are inverted during analysis. This ‘trick’ was discovered years ago and is based on techniques used by Dr. Alexander Elder.
Biotech SPBIO, Weekly Close (Inverted)
We’ve taken the weekly closing chart of SPBIO ($SPSIBI, on StockCharts) and inverted it to mimic the action of inverse fund LABD.
The index has no volume; so LABD is used instead.
The magenta arrow shows the pivot point for the index, corresponds will all-time record volume on leveraged inverse LABD.
Next, we’ll get closer-in and look at the ‘pivot’ on the hourly chart (inverted).
SPBIO, Hourly (Inverted).
The magenta arrows show successive positions (Livermore ‘probes’) entered (via LABD) before the main entry @ LABD 22.99, which was 90% of position size up to that point.
The next day (Friday) had a gap-lower open that was quickly reversed. Position size was increased by another 5%, at LABD 22.29 (not advice, not a recommendation).
Effective position equates to LABD 23.17
Price action pulled away steadily from the early morning levels, suggesting a sustainable reversal.
The Fundamentals
Some of this stuff, you just can’t make up.
Listed in somewhat chronological order, here they are (not an exhaustive list).
No. 1
Pfizer hires 600 to help document adverse events. Wasn’t it supposed to be ‘safe and effective’?
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® 