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Be There When Biotech Implodes

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:

Hybrid-OS-10142015-FINAL

Exodus members, the latest Strategy Session is out.  Check it out, especially Section IV.

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Switchboard 07/27/2015

The primary hypo from this morning’s report played out so far.  Sellers defended Friday’s range on our first attempt back into it.  Already looking like wait-and-see local-to-local type trading but these open auction outside range days can be big:07272015_NQ_SB

 

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Switchboard 07/23/2015

We’re neutral at the moment, inside yesterday’s normal print.  The pocket below is a risk here, but at some point I expect to see us revert back to value 4617 before we ultimately decide our fate.  Here’s today’s switchboard:

07232015_NQ_SB

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Switchboard 07/22/2015

Nice drive off the open up into the single prints.  Already nearly printed a first sigma range so it is going to take some OTF participation to push the pole climb.  Otherwise this wide initial balance might be setting up the dreaded normal day.

07222015_NQ_SB

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Switchboard 07/21/2015

Keying off opening swing low 4660.25 to see if locals are in control, wait-and-see mode.  Or if instead we go test the ledge lower.

07212015_NQ_SB

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Swtichboard 7/20/15

No sign of sellers yet.  Here’s today’s Nasdaq scorecard:

07202015_NQ_SB

 

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