Biotech Update 9/30/2015

Posted on Wednesday September 30, 2015

Biotech is clearly the hot topic of late. We have had a massive sell off over the last 7 trading days and finally found at least some short term stabilization. So what now.

First Let’s recap. Over the weekend, I was having many talks with people were long either the XBI, IBB or various names in the sector. They were asking, where the bottom was, what should they do etc.

So I felt it was best to post my thoughts in one place. Feel free to go back and review it here.

If you don’t want to read it, I first repromaned people for not having a plan, but told them that it looked like the market would give them another chance to GTFO

Here is the chart from the weekend article


Basically, I saw major support a the intersection the long term trend, along with the first H&S top target.

That zone was in the 285-295 area. Sure enough, yesterday’s low was 285.53. This shit ain’t rocket science, you just have to $tudy. As always with support and resistance, You look for places where it “should” come in. ¬†Sure enough in this case it did.

Here is the daily chart now.


So what does this all mean going forward? Well as always, we trade the price action in front of us.

Buy personally, my plan is to see what happens between 315 and 330 (the former neckline retest).

The expectation for me, is that we get an oversold bounce (which started today from support zone 1) and then we roll back over to the 260-245 area.

As you see in the chart, I will remain open minded to the idea that the bubble has not popped yet and the trend could continue higher. It is not my expectation. As always, I will follow price.

As of now, I have no biotech positions, as I am a seller of strength until I see a reason not to be. Cover at support sell at resistance. Price pays.


Summary. Expect bounce to 315-330 area. Rollover to 260-245 area. 

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