Baby Bull Round Two – Biotech

Here we go again. Remember when I warned traders not to short the baby bull in miners and exhorted them to not lose their position because surprises would come to the upside? Needless to say, many ignored that advice and they cost themselves dearly.

Now we have a second baby bull just getting started in Biotech. It still has a long ways to go. Yet I’m seeing some traders making the same mistakes again.

baby bull 1

The size of the bottoming pattern and the massive volume in LABU is screaming that a big BIG move is coming. Don’t make the same mistake again that you made with miners. Get in and sit tight. This rally will last at least 2 months before it needs to take a break.

baby bull 2

Today was the recognition day where the market realized the breakout is for real. We don’t need to look for an intermediate top until the weekly stochastics reach overbought. This rally is just getting started.

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107 thoughts on “BABY BULL ROUND II – BIOTECH

  1. Gary Post author

    Traders say they will wait for a trend, yet when one gets started human nature makes most people try to call the top. They end up fighting the trend instead of riding it. Very few traders can just get on board the trend (that they’ve been waiting for) and just sit tight. This is why very few people ever make the big money.

    1. Richard

      Gary, first off, great posting charts. Lots of good info.

      Question: Why do you believe biotech will rally longer than the miners out of the base? The base on the miners was much larger.

      I am very positive on the gold and will/have maintained 100% exposure to mining shares. When I feel the consolidation is complete, I will up to 200% using options. Markets tend to consolidate 87% of them time unless they are truly trending.

  2. Gary Post author

    With the speculative driver of this bull market (biotech) now back in the game and oil probably completing its DCL the runaway move is looking very likely. I don’t see how we can go back down and finish the DCL with two big components clearly finished with their DCL’s and heading higher.

  3. Wayne

    I’ve been waiting for the 7 ycl to get back in the market but by following your postings found the
    biotech sector. Thanks for your insight and encouragement, I took a position in ibb and xbi March 14
    and another on April 4. Today was a happy day to see the rise in those markets.
    Do you take positions in the etf’s and so which ones or in individual stocks?
    It’s nice to be back in the markets and on the right side of the trend.

    1. Gary Post author

      I only trade ETF’s. I don’t like being exposed to company specific risk so I never buy individual stocks.

  4. Richard Yancey

    Thanks to your recommendation for IBB I made a nice profit in the past several days. Thanks for all you do. R. Yancey

  5. Bill

    5 ok 6 days of gains and the jokers wild is already calling top in biotech and adding losing already under water shorts lol many earnings for bio coming in May … Long and strong

    1. Gary Post author

      Don’t mess with a baby bull. Get in and stay in till the weekly charts get overbought. The risk of getting left behind if you try to get cute and day trade is too great during a baby bull.

    1. Gary Post author

      Without a doubt the Nasdaq is going to break out of that 15 year consolidation. When it does it’s going to go a long long way driven by trillions upon trillions of global currency units. Nasdaq 20,000 isn’t out of the question.

        1. Guacamole

          I think this is the first thing you’ve ever typed on this forum that I agree with. Not sure how Gary thinks an index is gonna multiply more than 4X in a few years, even with a maniacal bubble phase. It took like 4 or 5 years to get 3X out of the March 2009 lowest low of the Great Recession.

        2. Gary Post author

          This is why you repeatedly fail to make money. You simply aren’t able to follow trends and you have no concept of the fundamentals driving these markets.

          It was right there in the comment. Trillions upon trillions of currency units.

          The last long term bull went from 600 (Dow) to 11,500. A gain of 2000%.

          A similar move would put the Dow at 120,000. But let’s cut that in half just to be safe.

          That is still 350%. Are you seriously going to tell me that the Dow couldn’t rise 350% over the next 3-5 years with every central bank printing 10’s of trillions of dollars?

          350% X 5000 = 25,000 Nasdaq.

          This is why the average investor can never make the big money, His time frame is way too short and his grasp of what a secular bull market can do is way to small.

          1. Stevie

            Again this is nothing but a lie. I’ve been short SSO 3 times the past week and covered for 8% gain in my entire portfolio. That’s making money, not losing.
            I’m short again 300% SSO as of yesterday’s close and I’ll be profiting again.

            You sell newsletter with 0 financial consequences. This type of style is exactly why so many got into trouble in 2011-2013.

          2. BILL

            Talking to Steve Gary you have to use pictures, renumber your dealing with a child mentality…Numbers ( obviously ) are not his bigger suit, Mr 1.5% daily lol,…

          3. Gary Post author

            You are trying to pick a top in a strongly trending market. It won’t be long before you lose all of those small gains because the market will surprise to the upside and you will be leveraged 300% short.

            How many times have you heard the phrase “Don’t fight the trend”.

          1. Anthonyo

            Stevie netanderthal you are way behind in times, a time traveller you are…the time for being a doomer and gloomer was over a vey long time ago… Your TA and EWT is what you base your money on? What a joke!
            EWT did not even work when it worked before! Let alone in the PPT markets we are in for teh past 7 years………..You need time to evolve yet, so stale ideas.

  6. Bill

    And by the way thank you Gary I’ll try and lighten up in the rhetoric… Till morning

    Good trades to all

  7. Guacamole

    I’m man enough to admit that I was skeptical of your biotech calls and all the LABU stuff. But damn, this looks like a sequel of the miners from a few months ago!

  8. emma

    Thx for the chart, that says it all. Dang!

    Here is another good way to profit from the PANAMA PANIC =>

    I think people are getting ready for EARNINGS, which starts the 11th of APRIL, and that could bring a few surprises.

    Obviously we have gone up harder than ever. We have not witnessed a rally this big since 1933, but as you know what goes up, will probably most likely come down. 😀

    1. Gary Post author

      Just keep trying to call a top. You may manage to miss the entire bubble phase if you try hard enough. 🙂

      1. Stefan

        Nope, I am all in, in Gold&Silver miners most of the time (Sold Victoria Gold after an exponential upmove this week), thats were my passion is !

        Waiting to pour Gold in Quebec 🙂 hopefully a very profitable trade !

        Bought 500.000 shares in GBB.v last summer at 2c, sitting on 1million shares. Hopefully 50c before year end.

  9. Jacob 2

    Nothing to do but sit on my hands. Looking at many charts in many different sector i should be doing nothing for quite some time. Good luck.

    1. beartrap

      This year is the biggest opportunity of this decade. Oil, oil stocks, gold, gold miners, biotech- just a few.
      You must have a very good job if you miss these moves. By Xmas A lot of Smartmoneytracker subscribers will reach the financial freedom.

  10. MuffinTop

    Would you believe me if I told you that there are some Traders out there who are currently trying to ‘short’ Biotech?! Lol! That’s like stepping in front of a freight train — it’s f*cking suicidal 🙂 Please don’t do it.

    1. Gary Post author

      People are fascinated with trying to pick tops. It’s like a moth to the flame.

      We saw it with the rally in metals. Experienced traders that should have known better fought the trend all the way up.

      1. BILL

        And to date the short miners and metals types have made NOTHING as both have been in a chop phase… they might as well have given the money away lol

  11. dab

    Gary, Nasdaq 20k is not even greedy. It is plain stupid. Look at 1970s and inflation there. Stocks went nowewhere nominal terms halved in real terms. So there was 6% day in biotech. Great. Be careful when crap rallies hard for it is normally the end of the move. USDJPY says and of carry trade. No growth. Only risks. And you proudly say Nasdaq 20k and absolutely breaking from 15 Yr high to the upside. Look at Nikkei and it’s long deflating bubble and be realistic.

    1. BILL

      In the early 70’s we had a gold standard, that was then this was now, tell us did they say the words Quantitative Easing in the 70’s as well? not that I can recall…times have changed in a big way and so has finance stop dwelling in the past.

  12. Gary Post author

    “While the smart money was busy selling, Gary got you knuckleheads buying hand over heal. It’s going to be a painful 4-6 weeks ahead”

    Us knuckleheads just made 22% yesterday in LABU 🙂

  13. Gary Post author

    Gold doing exactly what I predicted it would do. Just churning back and forth chewing up bulls and bears alike. I’m still looking for a potential double top in the miners before a deeper correction into an ICL in May.

  14. Joseph

    Hey Chris, Ralph ,Bill
    Short taken at 2055 on WED….. 2 emini contracts as posted yesterday…..Also said will hold into Aoril 7
    Not bad call for a day trade….would you agree…..
    Hedged… long OIL….

    1. Gary Post author

      I don’t buy 18 weeks into an intermediate rally. Seen this too many times. Still looking for a potential double top in miners to suck in the retail buyers and allow big money to unload more shares.

      The dollar hasn’t even rallied yet. The dollar has a date with an intermediate cycle low and at least a 5-6 week rally. When that happens gold will deliver the move down into it’s ICL.

      Just be patient.

    1. BILL

      A closely watched biotech play — the iShares biotech ETF IBB, -0.10% — has powered out of either a double-bottom base or an inverse head-and-shoulders pattern, depending on which chart lover you ask.

      But iBankCoin blogger The Fly isn’t buying it — instead, he’s mocking biotech’s believers.

      “If your desire is to live in Fantasy Land, what better place to be other than the biotech sector, an industry without fundamentals and the albatross of having to meet earnings expectations,” he says.

      “This is the only sector that offers high returns, based on a drug dream similar to playing the lottery, that goes unrivaled in the market place,” he adds.

      Other traders are buying, though. NorAm Asset Management’s Tim Reazor says his shop bought IBB on Tuesday, ahead of Wednesday’s 6% jump.

      “Instead of getting into an argument on the fundamentals of the market [or] the global socioeconomic situation, I think if you focus on setups, it’s going to lead you to clearer thought,” Reazor says. “And that’s exactly what played out in this setup of IBB.”

      Ibankcoin lol sure you do….

      1. Gary Post author

        Actually the big biotech companies are growing earnings at an astounding rate.

          1. BILL

            Over priced based on? your opinion? lets sees what you have. Price is WHAT someone is willing to pay not what your doomer pages say it is.

          2. Herman

            Stevie, this is a countertrend rally after a steep sell-off. Fundamentals don’t matter for the moment.

  15. Greig

    According to Gary’s opinion on energy and biotech sector, we should be long on IBB, XBI, LABU, ERX and IYE right ??? What is the chronological interval of keeping them ? I also know that 3x ETF’s are pretty dangerous…is that right ? How should someone deal with them ? Thank you in advance!

    1. BILL

      Hold these funds as per your greed level. Its that simple really, you either take the long bus or the short bus based on your greed its that simple really. As per Gary’s chart above, the weekly , were not even close to overbought, it may seem like a solid run because it ran up so fast the the truth is the rise is only six days young.

    2. Gary Post author

      If you bought LABU when we did you now have a big margin of safety and there is virtually no chance of having to take a loss.

      If you sat on the sidelines and watched the move pass you by then it’s going to be tougher to enter and hold the trade.

      This is why I keep telling people the time to buy is when you are scared.

      Now we have a classic example of why I disagreed with Alex about when to buy. He said one needs to wait for confirmation. I said I want to buy at a cycle bottom so my stop is close.

      So here we are. If you followed my strategy you are heavily into profits with a huge margin of safety.

      If you used Alex’s strategy you now have confirmation but your stop is a long long ways away. You might buy today and then IBB pulls back 5%. You end up freaking out and selling, then it turns and goes higher.

      This is how retail traders buy high and sell low. They trade with their emotions.

  16. Joseph

    Some perspective….
    1 trillion in shorts… Bullish
    To few Bears…. Bearish
    GDO now….Bearish
    Earnings….. Bearish. Discounted
    Overbought …. Bearish
    Good article i read.
    Traders Market……

    1. Gary Post author

      As you know I don’t wait for confirmation. By that time that happens you’ve already missed the move.

      1. Bud Fox

        You don’t listen very well.

        I didn’t say anything about confirmation. The title of your post is baby bull and my point is technically this is a bear market rally.

        1. Gary Post author

          There is no way to tell if this is a bear market rally????

          Based on the 7 year cycle low having been completed (the Dow, midcaps and transports have all broken thire multi-year cycle downtrend line) this is a baby bull.

    1. Ralph Wiederzane

      A few more S&P points and you’ll break even, great job! Or you could’ve been on the right side of the trend and long 3x GDX and be up 6% vs your 3% this morning. haha

        1. Gary Post author

          Some people are playing miners Old Turkey. Some are trading the intermediate cycles.

          We made enough on the metals trade. Now I will wait for a clear move down into an ICL before I buy back in. I don’t care if miners make a marginal new high. I don’t even care if gold were to run to 1308. It will be given back during the ICL.

          So I want to wait for the ICL before I go back in.

    2. BILL

      I like the way Steve adds in the 300% percent parts thats his way of trying to convince us he’s making bank lol

      1. Stevie

        I doubt any of you guys have the balls for you.
        That’s why you subscribe to a 30 dollar a month guru who has lead a lot of people to the poor house in the past. You knuckleheads will be next.

        1. BILL

          Our balls are on your chin small fry how any of us spend OUR money is none of your business, not go buy a Big Mac with all that heavy coin your making ….

          1. Stevie

            Oh c’mon billy balls.
            I made a real time call yesterday and market open down -100…maybe if you listen you might learn a few things.

        2. El Lobo

          Former subscriber here that agrees with a lot of what you say. Realized that if I make my trades based on a newsletter I have no business trading at all. Not that Gary offers no value, but if you just follow him blindly it could end poorly. Do your own due diligence. Also, hats off on your recent trades. Anyone that says 8% in a week or two is not impressive is clueless. A couple percent a month over a long time period will make you Betty rich.

  17. Jeffjoey

    Way to go Gary! I never would have even known about Biotech…as I was just focused on the metals for so many years making every mistake in the book. Patience is key and I am appreciative that in your missives you reiterate that over and over for an impulsive person like me.

  18. Ralph Wiederzane

    It’s looking like G-money might be correct again on the miners and they want to at least test the recent highs.

  19. Joseph

    YOU can say what you want Ralph, I called it in real Tiime, Down Into April 7, 2 emini at 2055…….
    Long OIL as stated many,many times….
    Be happy for all, were here to help, suggest, debate
    Not insult….
    This was a great trade !!

    1. Ralph Wiederzane

      No offense, but I’m not paying attention. I’m not into paying brokers and market makers to only make a couple points here and there, or like Stevie, lose a few here and there so I can pat myself on the back on an anonymous forum.

      1. BILL

        I hear you there Ralph…sit tight be right…day trading is for small time chumps…there I said it.

      2. Ralph Wiederzane

        My apologies, I just re-read what I wrote and it came off as rude. I don’t mean to be rude since you appear to be trying to help as well as being transparent around here, it’s just that we have two totally different trading styles and personalities. I’ve tried yours before and it didn’t work for me so I basically wasted a few years time before figuring out the game.

      3. Stevie

        I know folks like you.

        I’ve seen them in 2011-2013 playing leveraged miners following Gary’s suppose wisdom. They kept buying.. And then Gary even suggested buying make call options. Gary use to call folks out about market manipulation and at the end, Gary used the same manipulation talk to cover his 2 years of bad calls. Most went broke, that’s why Gary’s sub base took a big hit.

        Today, the same thing is happening but this time it’s Biotech.

        The dude sells newsletter with 0 financial consequences.

        1. BILL

          THEN WHY ARE YOU HERE!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! you read like a Liberal Dope hypocrite..

          1. BILL

            Its confirmed your a nut job, Gary do us a favor and can this nut job will ya….better yet consider this my last posting in your direction Steve, ill just scroll past anything you offer.

            Take care nut job

        2. Ralph Wiederzane

          Short bus Stevie, I dont use 3x funds. Apparently you’re so nervous holding 300% short in a rising trend that it’s affecting your reading comprehension. That’s a sign to pull in a little, buddy.

          I’m off to the gym, keeping paying your broker’s kids’ college tuition, I’m sure he loves you!

        3. Bud Fox


          I remember a guy named Steve that lost millions on the AGQ debacle.

          Ru the same guy?

  20. Stevie

    In Nov of 2014, the S&P was at 2055.
    Today it’s April 7, 2016 and S&P is 2055…

    Again… Who’s fighting the trend here?

      1. Ralph Wiederzane

        I think subscribers don’t understand why some come here just to try and throw us off a trend using bullshit stabs in the dark. Any idiot will be right for a day or two, but you dummies have missed doubling and tripling your accounts, all the while acting like you know better. I suppose that won’t make sense to you?

  21. Shank

    Gary I saw that China had increased its Gold reserves today. Further there are changes announced on the London Bullion market for gold urging greater transparency
    Further in mid April Shanghai is also becoming a price setter for Asian gold bullion trading. From all these are they bad development for Gold or is it time to look from a macro perspective of what’s taking place in both London n China

  22. Joseph

    Small time. LOL
    Yes, when it comes to property, I am really small, I do admit…. Trading, even smaller…..just want my piece and happy family
    However, I own 2. 100 unit APT Buildings…..
    Come by in Toronto, will have a nice Italian meal, my home made Dads wine and we can go by Apartments…..
    Retired at 40 as a Senior EnG from biggest Telecom Cmpy in Canada….. Was a Cisco CCIE as well…..
    DONT GET ALL sour, BE Humble, just sticking up for Steve
    Was funny as well, called a chump, your old school
    I only day trade when time permits and only go in when I’m sure, or as best as I can determine….

  23. rcun

    Why can you share with us why you show stochastics on the second chart and omit it on the first?

  24. Joseph

    Steve, cover shorts into noon time
    OIL will stay depressed today
    That’s what I’m doing
    It broke 2042 emi I so this is good for short but could be a trap….
    Out with 14 emini pts on 2/contracts
    Badabing bada boom

  25. dab

    Gary, biotech was just oversold. True bull market rally was in miners. These two bottoming processes were distinctively different. Bio is just fantasy land. Good buy in 2009, good sell in 2015. Best market rallies? Oh yes we all know them too well.

    1. Herman

      Gold miners are in a countertrend as well, same as oil, stocks and EUR. Will end in a few weeks.

      1. Ralph Wiederzane

        I’m not in Kinross, but loving those moving averages suggesting rocket ship action!

  26. Anthonyo

    Stevie you poor Neanderthal you are way behind in times, a time traveller you are…the time for being a doomer and gloomer was over a vey long time ago… Your TA and EWT is what you base your money on? What a joke!
    EWT did not even work when it worked before! Let alone in the PPT markets we are in for teh past 7 years………..You need time to evolve yet, so stale ideas, now walk up straight hunch back.

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