Last Updated on May 2, 2019 by Chris Stang
As the Market’s overheating, (Nasdaq: LABD) the S&P Biotech Bear 3x hits all-time lows, and Brexit fears loom. LABD gives a nice potential entry for biotech traders looking for protection the next couple weeks to hedge their portfolios. LABD moves sharply up and down like the VIX when market is in overbought conditions. Keep in mind, just because I am hedging my portfolio with LABD I still believe there are select biotechs that will do great.
LABD aligning with political concerns & dates that could potentially shake the market.
Technical setup for LABD:
Chart indicating Bullish Harmonic ratio, bouncing off 113 retracement (also referred to as the “bullish” 113) is a sign of potential reversal for the S&P Biotech Bear 3x (blue line). Brexit meeting is coming up in a few days, giving good case for a pullback in the S&P 500, Dow, Nasdaq, and related ETF’s; especially biotech as most are heavy with debt. Biotech ETF’s have been up ~25-30% ytd because of optimism in M&A activity. Even if Brexit is a nothing burger for the market, it is my opinion that we are due for a pullback as broader markets seem to be peaking and overbought signals haunt.
As long as the S&P and other ETF’s hold higher lows on a hypothetical pullback this will be known as a bullish correction. With LABD being cheap at the moment it is a great way to hedge risk in times of volatility for the MS team.
My plan is to watch the horizontal green lines, which I see as short-term resistance. I am looking for LABD to run into the $18-21 range then re-assessing whether or not to take profits into Brexit results.
This is my opinion, please do your homework before investing. I will be posting updates in the MS Forum.
I am/ we are long LABD.