Friday, March 7, 2014

IBB Biotech Weekly Chart Biotech Bubble Continues Topping Ready for Popping Price Extended

The IBB chart has been provided the last few months as the Biotech Bubble continues to top out. Price is extended above the moving averages (pink dots) requiring a mean reversion to the downside like the other tops. The price action has gone parabolic (sharp vertical rise) which is typically the action seen in commodities but not as much in stocks. Traders are tripping over each other to buy biotech stocks and cannot get enough.

The red lines show the negative divergence with the indicators, as well as overbot conditions, that create the spank down over the last couple weeks. The MACD line is long and strong so there may be one to three more weeks requires for price to place the top and roll over. Price had respected the 20 MA as support but has not touched the 20 MA since November. A double top move may be on tap. The Fed and BOJ central banker money printing creates the upside orgy in stocks during the last five years. IBB has ran from 55 to 275 from the March 2009 bottom due to the Fed and other central banker money printing; over +400%. Comically, Bernanke, Yellen and other Fed members say there are no bubbles in the markets. Nope, no bubble here, this is routine price action, move along, move along, nothing to see here.

The chart is exhausted with negative divergence and overbot conditions indicating weakness into the intermediate term. The bulls are creating near term momo with the ridiculously high MACD line but that will help keep price somewhat elevated for a week or two. If Chair Yellen, the BOJ and ECB do not pump equities with happy talk and stimulus, the chart set-up should exert itself with a sideways to sideways lower move expected for the weeks and months ahead popping the Biotech Stock Bubble. The top may end as a double top, M top pattern. The expectation for price is down, and that the biotech bubble should place a multi-year top this month. Sadly, Ma and Pa Kettle just took their entire life savings and placed it into biotech stocks because the nice gentlemen on television say biotech stocks are the best investments. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

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