I added back Biotech related DVAX yesterday, noting a short-term bottoming pattern (trade log): “As for the chart, the daily has a little hint of a short-term bottoming pattern if today remains positive.”
Now let’s take a look at the Biotech ETF (daily chart), which is forming something similar. The down-sloping SMA 200 (black) is actually something of a neckline for the pattern and this morning it is breaking above that. Note two previous failures to take out and hold the SMA 200. Attempt #3 in progress.
At this point it’s a bear market bounce within a downtrend. But Biotech tends to be inversely correlated with long-term yields and a real rally would have to start somewhere. The reason I am on the lookout for such situations is due to the larger plan we are developing that sees the election cycle, bleak sentiment and a climax in Fed hawk fear as potential stimulants.
Just an fyi picture for you in a market that is at max angst during a seasonal period (Q4) that often delivers the unexpected.
[edit] Adding the weekly chart…
It’s just pattern recognition, which is one step above witchcraft. But the small pattern above is actually working on the right side of a larger inverted H&S pattern. It does not prove out unless it takes out 135. But if it does the measurement is to 165, believe it or not.
