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 easy, lazy, does not require much thought to jump on the ‘dollar crash’ bandwagon.
Everybody’s doing it.
But let’s take a look at truth.
What does the market say about itself?
If the dollar manages to close below support (shown above) tomorrow, Friday, it sets up the market in Wyckoff spring position.
Weekends are always tough. The futures markets are closed from late Friday all the way to late Sunday.
A lot can happen (and sometimes does) in that time.
If there is an ‘event’ and you have no futures access, it can be excruciating to wait until 7:30 a.m., EST (pre-market) on the following Monday.
For now, all we need to know is, if the the dollar closes below support tomorrow, it will be in position to rally (significantly) in the coming weeks if there is a 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.
The forecast chart has been annotated to show where price action is now.
Biotech (SPBIO), and inverse fund LABD, are in a deep test. A little deeper than expected … but not enough to invalidate the set-up.
As of this post, price action is near the support line that’s just below the “Test” label.
Of course, the expectation is for this test to hold and for LABD to reverse back higher into the dynamic move shown; not advice, not a recommendation.
Fundamentals:
It seems like each day provides new insight into the disaster that is biotech.
This just out:
If you have been injected, The Red Cross says your blood is not wanted; your antibodies have been destroyed.
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.
First, the daily chart with the familiar trendlines
The magenta arrow shows, down-thrust has diverged. Today closed lower but thrust energy was (nearly) nonexistent.
The right side trend is still unknown.
More contact points are needed. However, inverse fund LABD has shown consistent trend angles (above) at various points throughout its sideways, corrective move.
Taking the SPBIO hourly chart and inverting, gives a more accurate picture; we see the Wyckoff set-up:
This type of price action is high probability. Not perfect, but still potentially 75% – 80%, effective or higher.
The fact that inverse tracking fund LABD accelerated upward into the close adds weight, we’re potentially at the end of the correction.
The fundamental backdrop continues to implode.
The plan for world control (through speck injected depopulation) is out in the open now. No doubt.
Amandha Vollmer has this update on the decades long, mass hypnosis.
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.
Above is the hourly SPBIO chart; inverted and annotated.
Under the conditions shown above, when price action penetrates support and then reverses, it’s called a Wyckoff ‘spring’.
From this point, the expectation is for a moderate rise, then test and then a dynamic rise to the top of the trading range.
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.
Early this year, TSLA spent about seven weeks attempting to move significantly higher.
During the week of February 26th, it gave up and broke down.
Since then, its come up to test the underside of support … now resistance (around 740) before again, turning lower.
Down -37%, since the end of January sounds bad enough. However, it’s the quarterly chart that contains the real horror story.
TSLA has posted a huge 490-point trading range (when taken from support at 78, to current price).
A down move to support from today’s levels, is a decline of -86%.
Markets like to come back and test; better to count on it, than ignore it.
Not saying that will happen to TSLA.
Nearly simultaneous with this first post, we have this article on ZeroHedge about a huge short position.
However, if any real problem does come up like another high profile ‘incident’ (as if we don’t have enough of them already), meaningful support is a long way down.
Just a few hours later, we have this, also from ZeroHedge about a Tesla running over two police officers … in China no less.
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.
Then, way back to “Reminiscences“, published in 1923.
As a reminder, we’re looking at biotech (SPBIO) from the perspective of being short the market.
The primary vehicle for that short, is highly leveraged inverse fund, LABD.
The last update gave a hint at the desired timeframe.
If the markets are in the process of reversing, ultimately going to the long awaited (since 2009), final draw-down (i.e. crash), then a likely bottom would occur where they (almost) always occur; during the third week of October.
In a nutshell, that’s the time frame.
Conversely, price action is the final arbiter. If biotech winds up effectively saying ‘not now’, well then, it has the final say.
Back to ‘Entries & Exits’.
One of the traders highlighted in the book (in addition to Weis), was William Doane; former Head Technician for Fidelity.
His timeframe is much longer than the typical market participant. He, like Weis are looking at monthly, quarterly and yearly charts.
That fact in and of itself, provides an edge.
One of the main take-aways from his section was (paraphrasing):
‘The first correction is the hardest. If you can get through that, it’s typically smooth sailing from then on’.
The biotech short via LABD (not advice, not a recommendation) may be at that point now. Painful to watch but necessary.
Next, we go to ‘Reminiscences’.
Those who have read the book, know all about ‘Turkey’; Mr. Partridge.
As the book states, he was much older than the rest who frequented the brokerage. Also, he did not appear to be that active in the markets (thus minimizing his transactions). He was interested in the big move.
The admonition from Partridge, was: ‘Don’t lose your position’. Don’t exit out, expecting a pull-back … that ultimately never comes.
So, we have two examples; three if you include Weis that begin from the very long time-frames and work inward.
Now, on to the market:
The long term, Quarterly analysis has already been done; linked here.
The chart in the link, is from last quarter and since then, (during this quarter), we’ve made new lows.
On the fundamental side, evidence is building by the day on what the ‘speck’ protection is all about.
If you’re really interested in the big picture, here’s a link to a five-plus hour presentation that spells it all out.
Momentum indicators MACD, on the Monthly and Weekly remain in a downtrend.
Using IBB, as the proxy for Quarterly momentum (not enough data for SPBIO), the indicator is flat.
Momentum’s in favor of (maintaining) a short position; not advice, not a recommendation.
The monthly chart of SPBIO (inverted), has price action coming back to former resistance (now support). This is normal market behavior.
Recall, that on the downside, if there is some kind of ‘event’, markets can slice through apparent support levels with ease.
With that in mind, on the inverted chart above, the next major ‘resistance’ level may or may not be of consequence.
Summary:
Each trading week is important.
However, next week will likely a pivotal one; providing more information on whether to maintain short or exit and stand aside; not advice, not a recommendation.
Stay Tuned
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’ve pulled out to the weekly time-frame on inverse fund LABD.
The chart’s been annotated with the same repeating trend line concept but with adjustments.
It may seem like an obvious statement but to form a trendline, price action needs to contact that trendline.
The internal lines (slightly lighter shade) show the repeating contact of price action … both on the left side of the lines and the right.
The left-most trend has three contacts. One on the left side before the down arrow and the others on the right.
The right-most trend starts at the low (Week 13) and has a potential push out of trend that returns … which may be in the process of confirmation this week.
This trade is currently being managed (not advice, not a recommendation) with an eye on a potential exit in the fall; possibly October – November time-frame.
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® 