Monday, August 25, 2014

NASDAQ Biotechs Getting Close (BIB / IBB /BIS)

NADAQ Bios have been one of the momentum plays and are one of the watchlist assets . I'm starting to notice the Ultra and 3x long/short ETFs giving stronger signals, they typically do give earlier signals than the underlying with no leverage, the simple reason I suspect is the leverage. For instance, FAZ and FAS are giving stronger signals than XLF and by the looks of both, I'd have no problem (I have no problem) holding FAZ long (3x short Financials).

As for NASDAQ Bios... IBB (NASDAQ Biotechs)...
 These may be further along in the reversal process. Note the clear resistance area that built over a week+ timeframe, that's going to be a very high probable head fake move/false breakout as the breakout triggers limit orders and technical traders chase the breakout/confirmation above a clear area of resistance, the bigger  the better. The 5 min BIB chart is leading negative and note the volume on the gap up this morning above resistance, this is why head fake moves are run, always look for that volume and 3C confirmation or something else, in this case it's something else, distribution in to that volume.

 The leveraged long ETF for NDX bios is leading negative right at the break above resistance, volume is up.

The leverage short for NASDAQ bios is confirming the two charts above with a leading positive at the mirror opposite break below support.

While I'd say this isn't a bad entry, there's usually a little bit more work on the divergence, but if this were one I was really interested in, I'd be looking at starting a partial position just like FAZ last week.

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