Right at the danger point, biotech’s (IBB) upward energy evaporates.
The 2-Day chart below shows a series of thrust energy units.
Going from 57-Million, all the way down to less than 1-Million (0.85-M), in six trading days.
An expandable version of the chart above (with additional technical data) is here.
Back in late August, the nascent BTU reversal was identified when an entry would have been low risk.
The chart speaks for itself.
If there’s only one chart that shows the benefit of reading the tape (not advice, not a recommendation) as presented on this site, The Danger Point, BTU is the case in point.
Effective tape reading requires at least 10,000 hours of training and/or experience.
The author presenting on this site, has over 23,000 hours at the tape. However, that experience does not equal perfection.
Experience equates to probability.
The longer one is in the markets, through booms, busts, flash crashes, manic and panic, the more one is able to operate as the masters of old and be separate from the crowd.
Now after BTU has decisively launched higher, everybody’s an expert. Two examples below:
We indeed, have a position in BTU.
However, instead of looking to buy with the rest of the herd, we’re looking for the exit.
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Ask not what the market is doing; rather ask, what is the market not doing?
It’s about fifteen minutes before the open. Biotech (IBB) was bid/ask as high as 137.01/137.44, in the pre-market session.
As we get nearer to the open, that high mark is being eroded to 136.73/137.11.
What’s not happening, is the market has not bid significantly higher than yesterday’s close.
If demand was strong, price action would have no problem pushing past the resistance area at 136.00.
The chart shows we’re at the danger point. We can see symmetry created by the trading range.
It is ten points from here to the top (all time high).
At the bottom of the range, it’s ten points down to the untested breakout, support level.
The Fed announcement is scheduled for 2:00 p.m. EST and trading may just tread water until that time.
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Getting out of a non-performing position allows the mind to clear.
What we see now, is a massive terminating wedge pattern for IBB.
That wedge had a trend line break September 3rd, on decisive volume.
The break is now being tested. This is typical market behavior. Expandable chart of IBB, is here
It’s about thirty minutes before the open and pre-market activity shows IBB trading higher.
The IBB, 50% retrace level is approximately ~ 136.20
IBB tends to move counter-trend during the first two hours of trade.
If the trend is down and the market’s just testing, the (continuation) reversal lower may come around 11:30 a.m. EST.
Inverse funds (not advice, not a recommendation) are BIS (2X-inverse) and LABD (3X-inverse).
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The agricultural food supply, and delivery systems are being destroyed systematically.
The fundamental picture for corn at this juncture, should be well known.
Weather events, whether manufactured or not, are taking out huge (silo) stockpiles in addition to destroying what’s still in the fields.
The August 20th, update highlighted a CORN trend-line.
Since then, CORN price action has morphed into a trading channel.
We’re now at the right side and in position to move higher. A channel failure at this point would be obvious.
If CORN does not continue upward from here, the channel has lost its effectiveness and/or, the market has some other objective.
Biotech IBB: Update
Anything can happen. Price action reversed above the 23.6%, retrace, hit the 38.2% retrace and kept going.
Our result was to exit the (IBB), short position during today’s session.
We’re past the 38% retrace level which leaves 50% and 61.8%; Trading action is to stand aside (not advice, not a recommendation) for now.
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Just before the all-time high in biotech (IBB), several screen shots of price-bar action were obtained.
Pasting it all together in an old-time flip-book format, we see the daily action of IBB over the past two months.
There’s no bonafide indicator that a top was imminent other than increased daily volume at the pivot.
That increased volume was a subtle clue more volume was not resulting in upward movement.
The next day, price action stalled and reversed.
The result is obvious but below the radar. IBB has not declined significantly enough, fast enough to draw outright attention.
This is precisely (not advice, not a recommendation) the area where Three Ten Trading established its short position.
In fact, as detailed in this update, the entire short position was exited and then re-established during this two-month long reversal.
The short position (via BIS) is now well in the green but ready to be exited at the first sign of trouble … all the while expecting further IBB downside ahead.
TC2000 Charts courtesy of Worden Brothers, Inc.
If biotech (IBB) declines from here, it may be in the process of forming a large, bearish Head & Shoulders pattern.
While the rest of the crowd freaks out over Tesla, Netflix and Facebook, underneath the radar, IBB is forming a massive long-term reversal.
Of course, the freak-out is by design. It’s all part of the plan; Bread and Circuses.
Keep the population continuously distracted: Wear your mask, be afraid, take the blue pill and follow orders; Sounds a lot like a certain European country in the early 1930s.
We’re in a long-term game plan(demic) of unprecedented wealth-transfer.
Part of this transfer is to keep the ‘market’ rising higher, while underneath, the foundation crumbles.
Those in the know, cash-out.
The vast majority of equities do not participate in the up-trend until the end. That end, is when the top ten, the top seven, the top five all the way to the top one, which at this point is Apple (AAPL), can’t go any higher.
In classical terms, the market ‘thins out’.
At this juncture and barring any surprise to the up-side, we see biotech (IBB) reached its all time high weeks, even months ago in late July.
There has been a steady, but halting progression lower until the past week.
If the 23.6%, retrace holds, it’s an indicator of substantial weakness in the sector.
Looking to what might be ahead, the weekly chart notations show a potential Head & Shoulders pattern in its very early stages.
A larger, more expandable version of the chart is here.
Fibonacci price projections (dashed lines) have been included to direct us to where price action may stabilize temporarily.
Those projections are based off the high-to-low and then rebound to the 23.6% retrace.
As always, anything can happen.
IBB could launch higher at the open on Monday and negate or severely damage the set-up. However, if it does not and continues lower, the H&S pattern remains in play.
It’s one hour before the close; biotech is hitting multiple technical flags simultaneously.
The weekly chart below, shows IBB retracing to Fibonacci 23.6% of its move from the July top.
Then it reversed.
Such a shallow 23.6%, retrace, where 38.2%, and 50%, are more common, indicates severe weakness.
It’s a harbinger of lower prices ahead.
In today’s session, just minutes ago, IBB posted an outside down (key reversal) daily bar.
So, we have a daily reversal within a larger, weekly reversal.
To make it technically correct for outside down, IBB would need to close below yesterday’s low of 127.99. So, we’ll see.
The short (not advice, not a recommendation) position via BIS, implemented by Three Ten Trading, has not changed. In fact, the short position has been increased since the last post.
There’s been no major break in IBB, yet. No air pockets, no negative news announcements.
As Livermore said a century ago (in 1923), ‘surprises happen in the direction of trend’.
The trend of IBB is down.
Let’s see what happens next.
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Update (9/9/20, 8:11 a.m. EST): UNG, shows pre-market action trading higher, +2.11%, as expected.
Original post (9/8/20):
Natural gas and more specifically, the tracking fund UNG is at its trend line; A trend line that’s been in-effect since July 31st, this year.
The Winter of Discontent post on natural gas, indicated a major long-term reversal. That analysis was complete with a test location (shown on the chart below).
It’s important to note, the test level was identified thirteen (trading) days in advance.
There was plenty of time to monitor price action, perform additional research and generate a supporting case before the test zone was reached.
UNG subsequently tested that level and never looked back.
Now, UNG has penetrated support (at the 13.00-area) and contacted its July trend line at the same time.
Essentially, in Wyckoff terms, it’s in spring position with the added technical condition of being at trend. For more on Wyckoff “springs”, see this publication.
This exact point is the ‘danger point’.
If UNG does not immediately bounce higher (at the next session), the trend may be broken and we’re right back into a possible continuation of the bear market that’s been in effect for years.
It should be noted that ‘danger points’ are also the location of lowest risk. Verification or failure of the move is not far away in either market direction.
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Biotech vaporization could go thermonuclear.
That was a potential outcome proposed in this update, just seven days ago.
On September 3rd, five days ago, Biotech (IBB) had its largest down-draft since June 11th.
Coincidentally, on that same day, this news was released concerning polio outbreaks in Africa.
Scroll down the article and a familiar name will appear. It’s also the name that has provided significant backing for Moderna (MRNA).
Moderna has fallen off the radar. MRNA, with no P/E and no yield. What? Nobody wants to stampede into the ‘cure’?
The top of Moderna was identified in this post. Along with a summary that enough of the public had been fleeced on the way up; it was time to get them on the way down.
MRNA is now down 34% from the top and down 23% from the last update.
That might sound cruel or harsh to discuss the markets in this way. It’s not nearly as bad as what Dr. Elder describes in his first book; Trading For A Living (summarizing):
‘The markets are like a medieval battlefield. You enter with full knowledge you may not come back. You are trying to kill your opponent, and him, you.
If you lose, all you own goes to him, including the wife and children.’
So, being part of the herd, stumbling around in the markets waiting to “fleeced” sounds way better.
The original premise of going short biotech was technical, fundamental and political.
Technically biotech (IBB) is the only sector with a weekly MACD sell signal as identified in this post. Fundamentally, we’re using Stockman’s assessment the sector is ‘bottled air’.
Politically, the elites may be starting to fight amongst (and eat) themselves as evidenced by the news release linked above.
Anything can happen and IBB could bounce and move higher during the next session. From a probability standpoint, the foundation of farce appears to be showing its true identity and origins.
The daily chart of IBB, is following (at this juncture) a Fibonacci projection. We’ve met and bounced off the 61.8% level.
If the trend remains to the downside, the next projection is 100.00, then 161.80, at IBB levels (blue ovals) 120.00 and 110.00, respectively.
The Danger Point® 