We’re just one month shy of exactly 5 years since the biotech top of July 2015.
For those five years, biotech has struggled higher with sideways, corrective price action. Only within the past two months, has IBB made it to new highs.
A sideways market is a bear market as dollar purchasing power drops steadily.
Bearish divergences seem to be everywhere. Divergences on both daily and weekly charts: MACD on the daily, RSI on the weekly. Even on the monthly chart, MACD lines are divergent.
Last session (Thursday) had IBB attempting to push higher. Up-volume contracted by 51% from the prior (down) session; another bearish sign.
Biotech is set to reverse in a big way. In what looks to be a possible last ditch attempt to cash-out, news was released that Texas has re-imposed restrictions.
IBB’s response was to push slightly higher for about an hour.
After the blip, price action reversed and continued lower; posting new daily lows right around 2:00 p.m. EST.
The move higher has failed.
There’s no more powerful set-up in the markets than a failed move. Failed moves show one side has reached exhaustion.
What if that ‘team’ has accomplished their objective?