Ominous Twin Peaks

The BIS trade (ultra-short biotechnology sector ETF), with which we had success inside the 12631 Trading Service earlier this year, is appealing once again.

The IBB, sector ETF for biotechs, is flashing a double peak pattern on the weekly chart after a steep multi-year bull run. I do not see too many traders eager to call for a double-top here, and understandably so given how many bear traps we have seen in recent years.

Still, this most recent peak has a clear negative divergence versus the prior one, in terms of the RSI weekly.

A break below $250 here likely seems me testing out the short side again.

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Hat Tip to 12631 member @StuOnGold

As you can see, the period starting in mid-July for the next several weeks is typically quite soft.

Courtesy of The PPT algorithm, here are the most current top five readings from my “12631 RELATIVE STRENGTH” custom-made screen, identifying which stocks are exuding some of the best performances to the market at-large at any given moment.

I look for stocks whose Daily PPT Hybrid Score surges, while the Weekly Hybrid has been negative over the past week. This can often yield stocks which are emerging from consolidations.

Members can click here to view and save the screen.

Sorted for at least 500,000 shares of daily average volume to ensure liquidity.

Please click on image to enlarge.

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To piggyback the weakness in the biotech sector today, Valeant has been one of the weakest names of late, individually.

On the daily chart, note how price continues to prove well-defined support and is now threatening a descending triangle breakdown.

I view this as a short setup on further weakness.

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The weakness in leaders like FB TSLA, etc., on top of the likes of FEYE and company is keeping me sidelined today, still in full cash from last week.

Gold and the miners failed to hold early gains, which basically has me hands-off from all commodities for now, as well.

Whether this is a summer grind or something worse remains to be seen. But I’d rather keep my powder (cash) dry while it sorts itself out.

The shiny flush bulls had yesterday seems to be dirtier…

The lagging small caps in the Russell 2000 Index are reversing lower this morning off the initial pop.

The 30-minute ETF chart, below, shows the small caps are now flirting with a pennant breakdown.

As we have been profiling for the month of July, so far, the small caps had been trending lower and recently settled into a grinding consolidation pattern.

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