If biotech (IBB) declines from here, it may be in the process of forming a large, bearish Head & Shoulders pattern.
While the rest of the crowd freaks out over Tesla, Netflix and Facebook, underneath the radar, IBB is forming a massive long-term reversal.
We’re in a long-term game plan(demic) of unprecedented wealth-transfer.
Part of this transfer is to keep the ‘market’ rising higher, while underneath, the foundation crumbles.
Those in the know, cash-out.
The vast majority of equities do not participate in the up-trend until the end. That end, is when the top ten, the top seven, the top five all the way to the top one, which at this point is Apple (AAPL), can’t go any higher.
In classical terms, the market ‘thins out’.
At this juncture and barring any surprise to the up-side, we see biotech (IBB) reached its all time high weeks, even months ago in late July.
There has been a steady, but halting progression lower until the past week.
If the 23.6%, retrace holds, it’s an indicator of substantial weakness in the sector.
Looking to what might be ahead, the weekly chart notations show a potential Head & Shoulders pattern in its very early stages.
A larger, more expandable version of the chart is here.
Fibonacci price projections (dashed lines) have been included to direct us to where price action may stabilize temporarily.
Those projections are based off the high-to-low and then rebound to the 23.6% retrace.
As always, anything can happen.
IBB could launch higher at the open on Monday and negate or severely damage the set-up. However, if it does not and continues lower, the H&S pattern remains in play.