I want to look at
biotech (NASDAQ:IBB ),
and also a new indicator.
Here’s the thing on biotech (NASDAQ:IBB ),
this was yesterday's
trade,
if you're looking at Friday down 4
percent. This is one where the
bloom has come off the rose.
I'm sure probably several of you are
still holding biotech (NASDAQ:IBB ) and it probably
ticks you off that I'm saying that now,
but it's not me it's the chart. The
50-day moving average
had been really pretty consistent
support for this stock,
even as it drifted a little bit
shallower than it had here,
it still held the stock through this
high base;
this was also another base. So this has
been forming
kind of a series of bases that
have ultimately been eclipsed by
higher prices. Well this was different, we
get a big move up, and this is when
everybody's talking about biotech (NASDAQ:IBB )
and
it was just great. But look at money
flow here;
this is one by Mark Chaykin
that really parses volume and closing
location values on stocks
over a particular moving average, he uses
21-days,
so it's a closed indicator as opposed
to an open indicator.
But here
you can see money flow peaked on this
high
here. When biotech (NASDAQ:IBB )
prints a higher high
but this money flow barely even
registers,
in fact I'd say it didn't even register at
all, that's a pretty key indication that
at least you've got,
and this isn't the Holy Grail
of indicators,
but this is a pretty good indication
here that you've at least got to keep
your stops pretty tight.
When this thing breaks below the
50-day moving average, where it had always
held,
you've get out of this stuff,
let somebody else who's not as smart as
you
buy this dip. Now, what about the 200-day
moving average?
Well, I haven't really seen it
be particularly relevant
before, since 2012, but this is a
pretty steep decline.
By the way, once this momentum is
broken it's not like it's just going to
race up to higher highs;
momentum stocks and sectors, after
they've broken,
just don't do that, money finds its way
elsewhere for various reasons.
Just keep your eye on this, maybe
you're going to get a little oversold
bounce here,
but if you're sitting there
holding some of these dogs
thinking that the markets wrong and that
your ultimately going to prevail,
I mean to tell you that the
markets not wrong, the market
is big enough to where it actually gets
to define right,
and if you're big and you get to define
right,
then guess what, you're not wrong.
