Closed (Margin): XBI August 19th 78/86 Short Strangle... for a 3.81 debit.
Comments: Taking a small loser here, since I seem to have been fiddling with it forever. Total credits collected of 3.41. (See Post Below). .40 ($40) realized loss.
XBI trade ideas
Will XBI clear supply zone?Some people use XBI (weekly, daily) to indicate risk-on/off since biotech stocks are generally riskier investments. Going back to the pandemic drop in 2020 (and before), you will see 87 as a resistance area. The market gapped over this when the recovery (market rally) picked up steam. Now here 86-87 is again at the top of a supply zone.
Based on other indicators as well, a pullback may occur here before further upside. Selling and/or put buying may occur before FOMC next week.
QQQ vs BIOTECK ( BIOTECK = 💪) I started playing LABU recently , arguably a bit late. Was stopped on the first one and am on second trade attempt , where if I can fully de risk, then I'll focus on adding but when we compare strength of the two names its clear who the winner is and this imo is the strongest sector . Was looking like healthcare was pushing up along with bio but in this last week healthcare has been lagging and bio has stayed the strongest in the market .
Blue line on top is basically bioteck vs qqq
Orange line is QQQ
CQQQ is right up there with XBI by the way but XBI is the winner at this time .
Green in the sea of red: Biotech (2)Summary
This week we are sharing 2 rebound trade opportunities in healthcare and biotech, AMEX:XLV and AMEX:XBI , which are showing relative strength against S&P500 and Nasdaq , making them better candidates to trade for rebound.
Since the beginning of 2022, skyrocketing inflation and increasing recession risk have pushed the broad equity markets to the downside. S&P500 is down more than 20% from peak, while the more tech heavy Nasdaq is down close to 30% from peak as of today. If we look back the whole rally, it all started during Mar-2020 as the Fed reacted aggressively toward covid by massive money printing (i.e. quantitative easing). In fact both S&P500 and Nasdaq are now getting closer to the 250 weeks moving average, which is approximately where the post-covid rally had broken the pre-covid peak. Rebound is very likely to happen as “where it started” is usually a strong resistance level that slows correction.
S&P500
Nasdaq100
To execute this trade, instead of directly longing the indexes, healthcare and biotech sector ETF, AMEX:XLV and AMEX:XBI are showing relative strength against S&P500 and Nasdaq100, which make them better candidates to trade the idea. Fundamentally speaking, we believe the reason behind the strength is due to the irreversible trends of aging population across the globe especially among developed countries; as well as in the seemingly more frequent pandemic outbreaks during recent years. Both trends create steady demand for healthcare and need for biotechnological innovation. The MRNA technology is a good recent example to illustrate the importance of biotechnological innovation in fighting pandemic.
We recommend more conservative traders to execute the idea with AMEX:XLV (link here: ), while more aggressive traders can go with AMEX:XBI (this post) which is relatively volatile.
Note : XBI also come with 3X leveraged ETF AMEX:LABU (bullish) and AMEX:LABD (bearish) for those who are looking for more leverage with same amount of capital
Technical
The 250 days moving average of AMEX:XBI is pointing downward, and it is currently trading below the 250 days moving average, which confirms the down trend is still effective for AMEX:XBI . Benchmarking with NASDAQ:QQQ (Nasdaq100 index ETF), although both are in similar down trend, AMEX:XBI 20 days moving average has already crossed the 50 days moving average while that of NASDAQ:QQQ still running below, which shows stronger confirmation of the rebound for AMEX:XBI than NASDAQ:QQQ .
Here are some important level one should pay attentions to:
Downside support
72.55: Jun-30 retest low after breaking 50 days moving average
61.78: May-12 52 weeks low
Upside resistance
84.63: Jul-8 high after breaking 50 days moving average
97.19: Apr-5 high before creating new low on May-12
118.23: 2021 May-10 consolidation bottom, which was broken, retested and continued to the downside during 2021 Nov to Dec
$XBI - How to trade when dealing with overhead supply. I first typed this up yesterday and accidently published it as a private idea. Here's the second attempt:
I rarely trade tickers with overhead resistance. The idea is to buy when the trend is clearly up and there's no overhead supply to dampen upward prices. Buy high and sell higher as it were. However, during selloffs, bear markets, etc, there is going to be great opportunities to buy stocks coming off their lows and reversing their down trends. One such ticker is $XBI. This chart is the monthly candle chart. On first glance we see a chart that rallied for quite some time and then sold off hard from peak to trough. However, there's some strong indicators here that this is a lasting bottom with a strong upside possibility. The May and June monthly candles not only tagged the long established support area but represented the most selling volume ever for the ETF in May (potentially clearing out a large amount of bag holders) which was followed up by the most buying volume ever for the ETF in June (Potentially the "smart" money getting involved). This formed a tweezers look with the two monthly candles. Moreover, while support held during these two volatile months, RSI signified that the ETF was the most oversold it had ever been in it its history. Confirming the RSI was the fact that both the May and June candles were outside the lower Bollinger band signifying the ETF was incredibly cheap.
Monthly Bollinger Bands:
The weekly chart confirmed what the monthly chart was showing. $XBI traded down from January through May all the while RSI was bottoming. The May 9th weekly candle and the June 13th weekly candle wicks both put in bottoms confirming the monthly chart. The ETF then cleared the first level of resistance on strong volume at the $72.58 area signifying a possible change in trend. One caveat, a possible weak spot is the weekly RSI has still not broken out to the positive range yet. However, it is pointing up. The weekly candle is now above the median of the Bollinger band . IMO the weekly chart is bullish.
Weekly Chart:
Weekly Bollinger Bands:
The daily chart looks absolutely fantastic IMO. There is a double bottom look with coinciding positive divergence on the RSI from May to June. The first level of resistance was sliced through on June 23rd and retested with buying volume on the 29th and the 30th confirming former resistance as new support. The ticker has just recently broken through second level resistance at the $81.71 area all the while RSI has been expanding in to a bullish regime and taking out its previous high from November of 21'. The 20day/50day MA's just crossed and are starting to curl upwards. After a brief squeeze look on the Bollinger bands the ticker tested the lower band and then broke above the median line and is now walking up the upper band. Relative strength looks like it is in the early stages of overall out performance as well. We can see this on the daily relative line chart of $XBI vs $SPY. Lots of bullish signals.
Daily Relative Strength Chart $XBI vs $SPY:
Daily Chart with Support & Resistance Levels:
On this daily chart I labeled the areas of possible support & resistance as levels. These are the areas I use for entry & exits. When trading stocks from below overhead supply it is reasonable to expect selling pressure as the stock moves into these levels. Patience is key. I take partial positions on penetrations of the resistance areas and then fill out the position upon retests confirming former resistance as support. Occasionally on strong up-moves you will not get a retest. In this instance I will fill my position upon the next penetration of an area of resistance or the next sell off. Whichever is first - it is not perfect but I am not looking for perfect. I am looking to develop a strong cost basis while building a long term position.
Daily Chart with Moving Averages:
Daily Bollinger Bands:
Obviously I have a bullish bias as I am long this ETF . How do I keep my bias in check? I respect the support/resistance levels. There's lots of overhead supply to contend with. I expect plenty of selling within the ranges of the support/resistance levels. A patient trader can scale in as these levels are taken out and set stop orders if the fail.
Any thoughts, feelings, and ideas are welcomed. Thanks for sharing. Good luck to all.
Rolled: XBI August 19th 70 Short Put to 78... for a 1.64 credit.
Comments: (Late Post). Delta balancing. Total credits collected of 3.41.
Stocks To WatchThere are no certainties in the stock market. These names have shown good relative strength and accumulation volume . This may give good risk/reward entries on some of the best names. Some of these charts still need to confirm their price action. This video is my watchlist. Most of these names are at or near all time highs or multi year highs. There are 15 total stocks on this list with 0 short squeeze candidates . Many of these have IPO'd in the last few years and still have a growth story ahead of them. Know your time frame and risk tolerance. Know your earnings dates! I go through these quickly so grab a pencil and paper and jot down the names that look interesting to you and then make the trade your own. Good Luck!
XBIDouble doji'd up into supply at trendline resistance. Bullish above the zone ($79), bearish below ($77) for me.
Rolling: XBI July 15th 65C/75P to August 70/86... for a 9.88 debit.
Comments: As with my IWM trade, paying a debit to uninvert this setup, free up buying power, and turn it into a higher POP (Probability of Profit) setup. I had collected a total of 11.65 in credits up to this point, so I'm still net credit by 1.77 after doing this, but with a smaller buying power footprint and with "delta/theta happy" metrics at -2.66/8.70. Like the IWM trade, however, it's under water: it's currently marking at 5.42. I had a brief opportunity to take it off for a .70 loss, but it decided to move too much ... .
Rolled: XBI July 15th 70C to the 65... for a 1.76 credit.
Comments: Inverting further ... . Total credits collected of 11.65 on a now 10-wide inverted. Delta/theta 38.22/9.49. I don't particularly like that delta/theta metric, but am about as inverted as I want to go.
Rolling: XBI June 17th 76P/71C to July 15th 75P/70C... for a 2.56 credit.
Comments: Looked like it was going to stay within in the strikes ... until yesterday, so rolling out here for duration and a credit. Total credits collected of 9.89 on a five wide with break evens at 65.11/79.89.
$XBI update #thestratI love being able to trade this level by level during crazy markets. Almost had a double outside day today. Now a 3-2 on the day and 4 hour. Will we expand this bf, get stuck in this range, or drop? We DID close above the weekly trigger but tomorrow may decide if it can keep the momentum for the weekly upside target. This can be played either way. If it reverses, the 3-2-2d on the 4hr would be ideal to move into the sss50% trigger. 3-2-2u break is the same on the 4hr or day.
$XBI breakout? 3-1 inside weekOk biotech..you look like you want to finally break this range. Either way, once it gets out, the move should be nice. TFC is green so I would lean more towards bullish along with market conditions.
Biotech Probably BottomedBeautiful capitulation wick, two strong trendline confluence, TD 13 I'm LOVING this chart.
The biotechs show signs of life!The $XBI managed to close the week at the highs despite the overall weakness displayed by most sectors on Friday. The relative strength of this sector compared to the others on a down day makes us more bullish moving forward. In case the overall market does not fall apart and continues to rebuild in the following period, we expect the $XBI to outperform given the fact that it has been one of the most oversold sectors in the past 9 months.
XBI outlook on future medicine We see it in our favorite sci fi movies: the cure for cancer, biotech armor, mind altering substances to enhance intelligence, so on so forth. Assuming this index is the representation of biotech importance, I'd like to hear ideas for how biotech would crash. Everything we've seen from the movies can be reasons for an increase in price.. but what would cause the destruction of biotech funding? Is it even possible? If we want to achieve space exploration.. how could biotech ever fail? Thanks.
Spotted potential cup and handle bottom on XBIIf the handle resistance is broken, it could have a nice rally up to at least $77.
Lots of wedge bottoms forming too which makes this set up even more bullish in my opinion.
However, the indicators look high on the 4 hour, so they might need to "recharge" before a breakout happens.
Determining Supply and Demand ZonesHey Everyone!
Sharing this video on how I chart out supply and demand.
I know I am predominately a math based trader, but supply and demand has traditionally worked extremely well for me with swing trades and thus I still do supply and demand assessments when planning swing trades in addition to quantitative assessments.
I thought I would share my personal supply and demand strategy with you. This may not be the "correct" way to determine supply and demand, but this way has worked very well for me in the past. It was taught to me by a swing trader friend of mine, so I can't take all of the credit here (or criticism).
I use this in combination with quantitative analysis (forecasting and time series modelling); however, this is completely acceptable and appropriate to do independently of any other analysis.
XBI is on my watch list and interestingly enough its current demand zone lines up kind of perfectly with my time series projections.
Hope you enjoy! Let me know if you have questions/comments or critiques.
XBI - Moving Average TestWith today's morning fiasco, XBI wicked down and touched the 100M Moving Average where we last bounced on March 2020. Volume is climaxing with hidden divergence on the RSI. This is the largest correction XBI has ever had its history currently down ~50% from all time highs.
Rolling: XBI June 17th 79 Call to 71... for a 1.72 credit.
Comments: Inverting here. Total credits collected of 7.33 on a 5-wide inversion (71C/76P). The best outcome for this would be a finish between 71 and 76, but the most I can hope to make on it would be the total credits collected of 7.33 minus the width of the inversion (5.00) or 2.33.
Rolling: XBI June 17th 110 Short Call to the 79 Short Call... for a 2.17 credit.
Comments: Rolling the untested side in. Total credits collected of 3.44 (See Post Below) plus the 2.17 here for a total of 5.61.
LABU - my "all in" bet, with a stopLabu's been falling and is currently bouncing off support after a 3.2% sell off early in the morning. Looks like a fantastic time to buy, considering it may hit 40$ in the next few years,
Im not all in, I also have ENSV at 33% size, but labu is 66%. I like that you can put your stop on labu at 8.04 quite reasonably.
XBI - full chart, log, showing consolidation zonesXBI currently in second congestion zone since it was created. Might go back to mid 60s before big break up
