IBB update

iIBB nov 13, 2016

We love blowing our own horn, nobody else does at least not often. Here is the text from that May 12, 2015 blog ;

    What we have here is a “flat” a-b-c correction that fits in a box that, in this case, has a slight downward skew. This is a particularly well formed example and consequently it is a credible predictor of the next move, which should be up to at least a new high.

    Looking at the bigchart (see previous blog) a reasonable guesstimate of where the ultimate top should come in, is around $400 or so. We know that there aren’t any bubbles, we have that on good authority. But what we also know is that bubbles occur invariable far away from home, that is in areas that we know very little or nothing about. Gullibility increases with ignorance, which we all know is itself bliss. We would not wait all the way to $400.

This was dead on, except maybe for the advice not to wait for $400. Lately every stock seems to have to go to the furthest extreme. Unfortunately , given the number of stocks, ETF’s and situations that we try to follow it is not feasible to always follow through. The size of my staff simple does not allow it, so you, the reader, have to think along! Here you would at least be out or maybe you would even have gone short and saved yourself from a 40% loss or made a gain of a similar amount.

      The latest C wave of a correction, the Trump effect according to some, was meteoric and approaching completion. After that we expect a second A-B-C down to take us, at least, to the 4th wave of previous degree which is around $200 or slightly above. Much lower levels are a distinct possibility. Equality between the two A-B-C’s and a 62% overall correction is at about 140 or so.

  The Trump argument for tech stocks is that these have been powered by foreign brain power. His immigration policies would reduce the availability of such brain power and ergo tech companies would suffer. So why did this ETF shoot up?, are biotech companies not even more dependent on foreign brains? Or is it that scarcity raises all prices, like the tide.

IBB update.

ibb may 12 2015

Last May the 15th, just before the peak, we did a blog on this ETF in which it was suggested that it would be wise to get out of this but that we did still expect it to continue up for , perhaps, another 5 months. Almost two months have gone by and, so far at least , the chart seems to support that outlook.

    What we have here is a “flat” a-b-c correction that fits in a box that, in this case, has a slight downward skew. This is a particularly well formed example and consequently it is a credible predictor of the next move, which should be up to at least a new high.

    Looking at the bigchart (see previous blog) a reasonable guesstimate of where the ultimate top should come in, is around $400 or so. We know that there aren’t any bubbles, we have that on good authority. But what we also know is that bubbles occur invariable far away from home, that is in areas that we know very little or nothing about. Gullibility increases with ignorance, which we all know is itself bliss. We would not wait all the way to $400.

IBB, the Ishares Biotechnology, update

ibb march 20 2015

Not too long ago this ETF looked like it was going vertical already at about $320. We thought it was a sell then, Dec. of last year and even earlier. Wrong. We are up another $30/$40 and are going more vertical. Of course you cannot possible go pure vertical as that would imply that time stands still , yes that takes a minute to digest but think about it.

    Looking at this chart again I was reminded of the Brenner cycle. It is a little known cycle that uses, alternatively, 7,8 and 9 year cycles for highs and lows in the market. More interestingly there is also the Joseph cycle which has biblical proportions and turns precisely on seven years. If you are so inclined you will notice that for the first seven years this ETF acted rather miserably (relative to the market overall which essentially doubled over the same time). Then we get seven years of plenty which period should end in about 5 months or so. If you buy into the message then you should save now for a rainy day, or more correctly in Egyptian terms, seven years without rain. In short a sell.

IBB, IShares Biotechnology.

ibb dec 4 2014

We have been wrong on this ETF before, but the count is now a perfectly clear 5-waves up sequence. In any event the chart stops at $320 so the stock cannot go any higher! This ETF consists of 125 different pharma and bio stocks, most of which you have never heard of. It earns a whopping 0.07 % per annum dividend (you have to own it for 30 years to get the same yield as you do in one year on a ten year bond). 39% of the stock is held in short positions so we are not alone but we do not suggest going short. We would rather buy a put. A 275 strike , March 2015 is going for about $10 and could, repeat could, easily be worth 10 times as much. Be prepared to do this a few times or alternatively start with a longer option. The expression “If at first you don’t succeed, try ,try again”  was first coined on the Amsterdam exchange in 1632 in the context of the cherry options trade, where more than 31 different varieties traded as “privileges” as they were then called.