NASDAQ Biotechs

It's pretty bad when the head of the F_E_D calls your industry group out as "Overvalued" or in a bubble like Yellen did a couple of months ago, saying the market itself was not in a bubble, but social media and biotechs were.

If you're a fund holding a rather large position in biotechs, some funds specialize in nothing but biotechs, I'm not sure how confident you'd feel that the PPT would be there to support your stocks if not outright pricking their bubble. However as we have covered many times, it takes time to move orders, whether accumulating or distributing as these are not 100 or 200 ,ot positions, it's not uncommon for a larger fund to have a billion dollar position in a single stock and that's considered a "moderate" size position, so yeah, it takes some time and it takes a lot of demand if you're trying to dump them, especially if the F_E_D just called them out as being over-valued.

I'm not a fan of trading individual biotechs, I've seen too many big moves in both directions that you can't predict, they depend on an FDDA letter and unless there's an FDA leak, you really don't have an edge , but as an industry group, that's averaged out.

We're already seeing the social media butterflies get hit like FacePlant (FB), I seriously doubt bios are far behind, thus I prefer something like the NASDAQ Biotech Index or the leveraged short, BIS.

 The squeeze in biotechs has been huge, but to do that a technical breakout needed to occur, that's above the resistance trendline, at that point shorts cover, the bear trap. However, this move on a 30 min chart doesn't look anything like accumulation or even in line, it looks like what I'd expect after the head of the F_E_D slams the group specifically, a strange thing for her to do in the first place...This looks like distribution in to higher prices which is what you need to move a large position without crashing it like they did with AAPL in 2012/2013 when everyone just sold at once after seeing Third Point's Dan Loeb had moved out of AAPL.

 I like to use price strength and 3C weakness to enter positions, less risk, better entry, this last move which is similar to a market head fake move as a lot of assets are so deeply correlated, "should" have seen 3C move higher and confirm as it did just before, it didn't, that's what I look for in an entry.

The opposite chart, BIS, the2x short Biotechs shows confirmation with a leading positive divegrence in to weakness.

 As for intraday, the 5 min chart is the first timeframe for the most part that intraday action is representative of institutional activity, the leading negative divegrence is what I've been waiting to see as I've been watching bios for a few weeks.

On the same 5 min chart, look at the confirming leading positive in BIS, 2x short NASDAQ Biotechs.