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XBI/LABU Stop Clipped- New Short Entry

XBI slightly exceeded the revised suggested stop yesterday (which was lowered to the entry point for a breakeven on the trade). In hindsight, l should have left a little more room for that expected counter-trend bounce. As the charts still indicate more downside, XBI or LABU will be added back as a new Active Short Trade here with a stop above yesterday's high of 63.76 & a new price target of 58.61 (LABU current price/entry on the new trade is 43.37). Updated 60-minute chart.

XBI 60-minute Aug 16th

XBI 60-minute Aug 16th

More of the rationale behind my thoughts on this trade are explained in Friday's video update of the XBI/LABU which can be viewed by clicking here.

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Aug 16, 2016 10:31am|Categories: Completed Trades - Short|Tags: , |4 Comments

4 Comments

  1. lee1 August 16, 2016 11:15 am at 11:15 am

    Xbi will depend on the market. If you think market will head lower so will xbi. If market heads higher so will xbi.

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  2. dan123 August 16, 2016 12:51 pm at 12:51 pm

    Thanks Randy I am still long BIS, I see a great reward being short biotech at these areas

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  3. GetItRiight August 16, 2016 2:16 pm at 2:16 pm

    Randy, I read this comment on Marketwatch about XBI:
    This week’s upturn positions the group to retest the August peak, and a breakout would open the path to a projected target just above 69. Conversely, a violation of first support, circa 60, would raise a technical caution flag.

    Also notice the impending golden cross — or bullish 50-day/200-day moving average crossover — signaling that the intermediate-term uptrend has overtaken the longer-term trend.

    The author sees more upside due to the crossing of the averages. Does this make you cautious about this trade?

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    • rsotc August 16, 2016 11:32 pm at 11:32 pm

      GIR- Regarding the risk of getting caught on the wrong side of a breakout above the Aug highs, the stops are much too close to do any major damage on this trade. With the potential golden cross on the 50/20 ma pair, I checked using both simple & exponential moving averages on XBI and both have been plagued with several whipsaw signals (bullish & bearish crosses) so far this year. That also holds true if we get a solid cross on the 200/50 MA pair (both the simple & exponential 20 & 50 MAs appear to be intersecting now).

      Those are potential longer-term bullish developments. As of now, the XBI/LABU short is only intended as a quick pullback trade based off the intraday charts & with the broad markets just recently showing some early signs of cracking (again, only on the intraday time frames), I think the XBI short still has a decent chance of playing out.

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