Biotech … ‘Back-n-Test’

June 10, 2024 By in $SPSIBI, Biotech, David Weis, LABD, LABD-24-12, Prechter, SPBIO, XBI

Watch The Volume

‘If, on the next pull-back, volume contracts, the spring has been tested …’; David Weis

On the chart, that’s what we have.

Today also looks to be an apparent 50%, retrace on Fibonacci Day 3, from the June 6th, reversal.

Taking it all together, the next session(s) could be very interesting.

Biotech XBI, Daily (inverted)

Is it textbook?

We have a spring set-up penetration (resistance non-inverted), a swift move upward and now, a test back to 50% (level not shown), on contracting volume.

If the test is complete, the obvious expectation is for a higher open (lower non-inverted) at the next session (not advice, not a recommendation)

Rule of Alternation

Using this update and the discussion of ‘alternation’, we can already see price action is more volatile and so far, has ‘simple’ form.

Stay Tuned

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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

Biotech ‘Put’ … +160%, Overnight

June 9, 2024 By in $SPSIBI, Biotech, Dr. Elder, Heresy Financial, SPBIO, XBI, XBI-OPT-24-01 2 Comments

Details On The Trade

Options: A whole other level of risk/reward.

Buying an option, you have a ‘right’.

Selling (to open), you have an ‘obligation’.

There are plenty of horror stories selling options. A typical example, is this one.

However, when buying options (to open), as Dr. Elder has said, you have to jump through ‘three hoops at once‘; get it right on the stock, direction, and time.

He goes on to say, working the options market is counter intuitive. Traders naturally gravitate to long-dated, in-the-money options so the trade has time ‘work out’.

His method’s the opposite; short-dated, out-of-the-money.

So, what exactly does that look like?

The XBI, Short-Dated, Put

The situation on biotech, its reversal, first covered here, is a well-known topic on this site.

Using that information, especially this update and this one, probabilities were high for downside the next session.

With that, we have the following.

Biotech XBI, 1-minute

Time stamp on the entry from the broker states: 15:35:10, shown on the chart.

Time stamp on the exit is: 09:31:43, also shown.

Note: Entry was executed as the price of XBI was rising (for nine-minutes), with option value declining.

That rise does not look like much but we’re one day before expiration; option value is fluctuating significantly.

Perfection vs. Effectiveness

After the entry, we see later, there’s a 1-minute ‘blip’ higher before that blip was reversed.

Waiting for entry could have been better from a lower price standpoint.

That blip could have easily gone the other way, option value rising rapidly, low-risk (entry) opportunity gone.

Looking at the chart, one could say that ‘it’s not perfect’ and that’s true.

However, for being in the market just 29-trading minutes, gain of +160%, one could say, it was highly effective.

Stay Tuned

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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 Nvidia (Split) Top

June 8, 2024 By in 1987, 1998, 2000 - 2001, 2007 - 2008, Artificial Intelligence, Federal Reserve, NVDA, SOXX 3 Comments

Top of The Tops?

Here … ‘Hold this bag’.

Having been through the crash of ’87, ’98, ’01, ’08, and now, the feeling is similar.

Each time the vehicle (stock) is different but also the same, at the same time.

In case anyone wants to review, here’s the definition of ‘bag holder‘.

Is Now, The Time?

Previous analysis and potential top identification for NVDA, has been premature.

With that in mind, presented below are two charts.

One has the Fibonacci count from the October ’22 lows; the other, shows a trading channel overlay.

The inference is, we’re close to some kind of ‘event’ whether it be sideways congestion or reversal (not advice, not a recommendation).

Nvidia NVDA, Weekly

It appears, since the October ’22 lows, NVDA is being influenced by a Fibonacci sequence.

The ”close’ chart has the same Fibonacci count as well as the current trading channel.

Next week is ‘Week 88’, stock-split (10 to 1), as well as the Fed meeting.

Week 88, is within the margin of error for a precise Fibonacci count, Week 89.

With NVDA, at the top of its trading range, one needs to be on the lookout for some type of Fed/Stock-Split ‘overshoot’ or other indicator of potential upside limit (not advice, not a recommendation).

Stay Tuned

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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 Case For ‘Swift’ Downside: XBI

June 6, 2024 By in $SPSIBI, Biotech, LABD, LABD-24-12, Monty Python, Prechter, SPBIO, XBI 3 Comments

Rule Of Alternation

The last update presented a multi-timeframe analysis; medium to long-term (potential) bearish set-up in biotech, XBI.

This morning’s action appears to be confirming the up-thrust potential.

Now, we’ll get into why this move may happen quickly.

Multiple Timeframes

If the premise is correct, that we’ve gone through a month-long test of the weekly (timeframe) up-thrust, testing may now be complete.

Naturally, the power behind a weekly move, has more substantial effect than daily.

Next, the topic at hand; Prechter’s ‘Rule of alternation’.

Biotech XBI, Daily

The first chart shows detail on the last up-thrust.

Price action penetrated resistance, then posted five-days of congestion before breaking lower.

We’re labeling that congestion action as ‘complex’.

Next, we have the current situation. An apparent up-thrust in its initial stages.

If what we have now, is indeed an up-thrust, taking all the prior considerations into account, it’s reasonable to expect the subsequent move will be less complex, having different form, and move more quickly (not advice, not a recommendation).

In any case, we have a ‘hard stop’ for a short position, at the session high (not advice, not a recommendation).

Our Quest, Is At An End

Like something out of Monty Python, the entire analysis of downside potential feels like the quest is at an end.

However, just like the video snippet in the link above, what looks to be a dramatic conclusion to weeks if not months of work, could be completely derailed by a bunch of ‘French’ guys hanging out in a British castle 🙂

Stay Tuned

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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

After The Close

June 5, 2024 By in $SPSIBI, Biotech, LABD, LABD-24-12, SPBIO, Wyckoff, XBI 2 Comments

Biotech In Review

In this update, we’ll review the entire biotech (bearish) XBI, set-up.

First: Going way-back to March 10th, this year was this post.

There was potential for a long-term downside reversal in biotech, XBI.

Subsequent price action proved the analysis to be correct; biotech declined significantly, down over 18%, before recovering.

Second: The weekly timeframe Up-Thrust was properly identified as (in Wyckoff terms) there was ‘Sign-of-Supply’, with price action in decline.

Third: If, and it’s a big if, we’re in a long-term reversal, we’ve had the initial Sign-of-Supply that’s been followed by an apparent test.

That’s where we are now, as shown in the weekly chart.

Biotech XBI Weekly (inverted)

The chart is inverted so Sign-of-Supply becomes Sign-of-Demand.

Note the MACD is very close to a crossover.

Doing so, would put a serious dent in the ‘Spring, Demand and Test’ assessment.

Now, on to the Daily

Fourth: Buried within the weekly action, ‘Demand and Test’ (inverted chart) is the Daily, with its own set-up.

Biotech XBI, Daily (inverted).

With the weekly in a potential ‘test’, the daily has formed a spring set-up.

Potential for a bullish divergence, noted in the prior update.

Now, it’s here.

Obviously, the expectation is for price action to rise on the inverted chart(s); Downside for the actual XBI.

Fifth: Depending on what happens next, if we do get a reversal to the upside, inverted charts, there’s a potential for that action to be swift.

If and when that happens, we’ll cover it in another update.

Stay Tuned

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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

Biotech … Hits Target

June 5, 2024 By in $SPSIBI, Biotech, LABD, LABD-24-12, SOXX, SPBIO, Spring-to-Up-Thrust, XBI

Meanwhile, On The Other Side …

While the SOXX fights it out between bulls and bears, biotech XBI, has quietly penetrated resistance … and stopped.

Price action’s currently hovering above resistance in a narrow range.

The prior update showed the likely outcome for a spring-to-up-thrust target.

It’s arguable that we’re here now (not advice, not a recommendation).

Biotech XBI Daily

The upside penetration is not all that convincing.

That could be good or bad depending on one’s viewpoint.

Is there no more energy left or is the XBI just hesitating before moving higher?

If we pull back to the longer, weekly timeframe and recall, all of this action may be just a ‘test’ of a larger (timeframe) up-thrust.

That marginal energy would correlate with limited upside during a potential breakout (not advice, not a recommendation).

Stay Tuned

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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

SOXX … Bump & Run

June 5, 2024 By in Semiconductors, SOXS, SOXS-24-07, SOXX 1 Comment

Exit Or Not?

Trader Discretion.

SOXX hit the stop level (just barely) listed in this post.

We’ve all heard the stories of getting stopped out just as the market took off.

Is that what’s happening now?

From a personal standpoint, I am maintaining the SOXX short (via SOXS), but will have to monitor the action throughout the day.

If there’s no significant retrace lower, or we post another daily high (low on the SOXS) the trade is closed (not advice, not a recommendation).

Update: 10:35 a.m., EST

Trade is exited for now. Watching closely to see if gap is closed or intraday reversal (not advice, not a recommendation).

Semiconductors SOXX, Daily

Stay Tuned

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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

Biotech … Nears Set-Up Target

June 4, 2024 By in $SPSIBI, Biotech, LABD, SPBIO, Spring-to-Up-Thrust, XBI 3 Comments

The Pattern (About) To Repeat

Of course, there’s no guarantee, biotech is going to repeat a repeating pattern; ‘spring-to-up-thrust’, but it looks probable.

We’ll start first, with the unmarked chart of biotech XBI.

Looking at the past month or so of trading activity, the eye should be drawn immediately to the potential.

Biotech XBI, Daily

If it’s a little vague, the second chart shows the detail.

Now, for the mark-up

Not included on the charts, is MACD.

If price action gets to the up-thrust (target) area and stalls, daily MACD could post a bearish divergence.

Let’s not forget, this congestion action continues to build a downside count when considering Point & Figure.

Stay Tuned

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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

Stops … How & When

June 3, 2024 By in David Weis, Dr. Elder, SOXS, SOXS-24-07, SOXX 1 Comment

The SOXX Example

‘Set the stop and walk away’.

Those familiar with the David Weis trading video, know that phrase well.

The entry analysis is done, the trade entered and now, the management of that trade (not advice, not a recommendation).

The SOXX & The Stop

We’re only part way through today’s session; it’s already been a very busy day for the SOXX.

A gap-up open that was quickly retraced. Now, we’re trading lower, hovering around 231.50

Elder said years ago, ‘when the market is at a reversal point, there’s a lot of turbulence’.

We have that for sure in this case.

Moving on to the chart

Semiconductors SOXX, Daily

Stated in a prior update, a short position on the SOXX would have an initial stop of 243.63.

As a result of this morning’s action, it’s reasonable to move that stop lower (not advice, not a recommendation).

The reason to move lower so quickly, has been defined by the market itself.

We’ve already had a sharp opening gap-higher where the bulls (may) have given it all they have.

That level was quickly retraced, inferring the bears are (now) in control.

If that level is threatened, SOXX moving higher, then bulls have regained control, likely to move higher, still.

There’s nothing else but ‘set the stop and walk away’. 🙂

Of course, if one is using the leveraged inverse fund SOXS for a short position, the stop level chosen would correspond to the SOXX, above (not advice, not a recommendation).

Stay Tuned

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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 SOXX, Looking Both Ways

June 3, 2024 By in 1987, Semiconductors, SOXS, SOXS-24-07, SOXX

Narrowing Risk or Preparing For Higher?

In the pre-market, the SOXX is up about +1.29%, trading at 236.90.

As discussed in the ‘comment’ section of the prior update, if last Friday was short covering, the expectation was for a lower open.

So, far it’s not there, or there’s more ‘covering’ to go.

From a Fibonacci standpoint (shown below), pre-market action is near the 61.8% retrace.

Semiconductor SOXX, 15-minute

As of this post (8:15 a.m., EST) SOXX is trading at the Fibonacci level (small black ‘brackets’ on the chart).

We can see that area is also resistance.

In-n-Out

This is what working at ‘the edge of the lake’ is all about.

Price action has not shown decisively whether it will continue higher or if we’re in a reversal.

A decisive push past Friday’s SOXX high, 237.35, likely means it’s going to attempt to close the gap left from the May 29th open (not advice, not a recommendation).

Looking at it both ways, the risk on a short position is being lowered further, or we’re on to new summertime highs (like August 1987) before potential reversal.

Stay Tuned

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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