I am in a pickle here. My bias model was atrociously wrong about this entire October rally. The bias has been short since October 4th and it is short again heading into this week. This week is a new month, a month that, mind you, is historically bullish.
So new month, bullish month, and a model on a losing streak and now I have to decide whether to work within the confines of another short bias.
Fortunately my bias has a few circuit breakers. Last week the circuit breaker was a bullish third reaction up after the FOMC rate decision. Other circuit breakers include pressing beyond the ATR band and trend days against my bias. These help keep me in the game even when I am wrong.
This week has no major economic event until Friday morning when we hear Nonfarm payroll.
More concerning is biotech which is already down two days off my price level. I did not initiate my short at this level because it was not a conviction level and I was running around like a madman performing various rituals for the Halloween festivities.
So now I have to decide whether to chase the weakness in biotech, which is real risky because I have no reference to whether I am wrong until about ten dollars higher on the IBB.
Yet I know the comeuppance is coming—an event so gruesome, so all encompassing, that it carries a grandiose reward for the speed demons who latch onto the price wagon before it heads off the cliff.
A new month means the higher time frame is more likely to participate so this first week could offer decent opportunity to make some November money before we stall into more boring grind. I will be working the short side more aggressively than the long until further notice.
Finally—for two weeks I was working rose colored sunglasses (my short bias) with a conflicting Exodus Hybrid Oversold cycle. That was a conundrum which kept my Switchboard more-or-less neutral and kept me skittish. THIS IS NO LONGER THE CASE. The cycle was completed on close of business Wednesday. Exodus threw down some big numbers on this last cycle:
Exodus members, the latest Strategy Session is out. Check it out, especially Section IV.
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Screw exodus, do your own thing and you’ll make more money. I think traders call it “noise”.
Short Chipotle.
The whole point of mentioning Exodus was that my model, which was signalling the short bias, was conflicting the Exodus long bias. This week that is not the case and I fell more confident about the short.
Completely agree on Biotech. Traders do not understand what a Hillary presidency means. They need to look at what happened back when she was first lady. And Obamacare is starting to be exposed as having possible fraud running rampant thru the entire healthcare space. $VRX is most likely the first not the only to have alleged issues.
Know one knows who Hillary really is. Far left of Obama would not be a shocker. That is the issue no one is talking about. Once in the WH we will all find out.
Short biotech. C’mon, just do it. Less talk, more action.
I’m long XBI; I averaged up on Friday’s dip.
One of us will be correct and one will be wrong. My thesis is that medical costs continue to soar which will spread dollars and higher earnings to all things medical.
With the boomers aging, moar money will be pouring into medicine; biotech will take its cut of moar money.
You’re either correct and will be flying F on Delta for Christmas rather than that craphole Spirit or you’re wrong and will be going Greyhound.
What I’m not reading is your thesis as to why biotech tanks. Billary? The election’s 13 months from now and she can talk tough on medical costs, but she’s also filling her pockets with money from the medical industry. It’s all bread and circuses for the plebes. https://www.bostonglobe.com/news/politics/2015/10/16/hillary-clinton-takes-big-money-from-drug-industry-even-she-seeks-cap-costs/NG7vw5SnNAgFocqvSWwu2K/story.html
Dude. Boomers aging? Ever heard of “sold to you”?
Dude, do you know how much Obamacare premiums are rising, on average, this year? 7.5% That’s considerably higher than inflation. Some of those moar Obamacare dollars are going to find their way into biotech coffers.
If you’re so confident that biotech’s going to tank, short the sector. I’m putting my money where my mouth is and have a long XBI position that’s in the green.
I’ve got no problem with others taking an opposite position than me. But at least have a reasonable thesis for shorting biotech other than Billary.
A little less conversation a little more action.
https://www.youtube.com/watch?v=gvlxRvhCB_A
It’s the most expensive industry in the stocked market and no industry will be spared from the under-the-surface market correction.
As for not positioning yet–I intend to use leverage so I want to be confident with my spot.
Sounds like analysis paralysis.
As far as a market correction, that already occurred.
On a serious note, this is not a sector to be shorting unless it’s printing new all time highs, and even then I’d be cautious by not using leverage. This sector is volatile enough without leverage.
I wrote covered calls this AM on XBI expiring this Friday with a 74 strike. The stock’s currently 70.03+3.40 (+5.1% unlevered). If I get taken out of my position, that’s fine with me. If I don’t, I’ll write more out of the money weekly covered calls. I’ll get taken out eventually.
There’s been a LOT of bad news in this sector recently. I don’t see a catalyst to drive it lower from here.