Today we will look at the Direxion Daily S&P Biotech 3x Shares (NYSE:$LABD), with specific emphasis on ADX readings on these shares. There are a number of chart analysts who are optimistic that an ADX reading over 25 would indicate a strong trend. That said, a reading under 20 illustrates that there is no trend, while a reading from 20-25 suggests that there is no clear trend warning.
Originally created by J.Welles Wilder, the ADX is meant to decipher how strong a trend is. Generally speaking, an increasing ADX line means that there is an existing trend currently gaining strength. If there was a falling ADX line, this illustrates that an existing trend is not gaining momentum.
As of right now, the 14-day ADX is sitting at 13.46. Chart analysis is hopeful that an ADX reading above twenty would indicate a strong trend.
Commodity Channel Index Watch.
Looking at the 14-day Commodity Channel Index (CCI) for Direxion Daily S&P Biotech Bear 3x Shares ($LABD), you will see that it is standing at -125.12. Designed by Donald Lambert, the CCI is a technical indicator used throughout the technical analysis. If there is a CCI reading closer to +100, this might illustrate more buying (or overbought) and a reading that is closer to -100 may illustrate more selling (or oversold).
Moving Averages.
Currently, shares of Direxion Daily S&P Biotech Bear 3x Shares ($LABD) have a 7-day moving average of 9.33. Looking at the relative strength indicator, you will see the following: the 14-day RSI is at 37.33, the 7-day RSI sits at 28.31, and last but not least, the 3-day RSI is at 10.32
What Is This Used For?
- Spot Trends
- Identify Price Reversals
- Locate support or resistance levels
Keep in mind that a particular stock might be considered to be in an uptrend if trading occurs above a moving average and that average is leaning upwards. That said, a stock could be considered to be in a downtrend if trading occurs below the moving average and the average is leaning downwards.
RSI Analysis.
Again, take a glance at the relative strength indicator and note the following: the 14-day RSI is currently sitting at 37.33, the 7-day is at 28.31, and the 3-day is at 10.32. Typically, the RSI is thought to be oversold when it falls below 30 and overbought when it goes above 70. For the most part, RSI is used to find general trends and divergences and failure swings.
RSI Main Metrics.
– Oversold Range = Below 30
– Overbought Range = Above 70
So, what’s in store for the stock market over the course of the next few months? First, capitalizing on current trends is a must. Plus, some investors might benefit from looking for value in the present investing landscape. That said, investors mindsets are always different. For those investors looking for healthcare stocks to invest in, keep a close eye on technicals and fundamentals. You should also maintain focus on positive estimate revisions in order to gain a competitive edge in the market.
Featured Image: Depositphotos/© leungchopan
