Monday, September 28, 2015

IBB Biotech Weekly Chart Bear Market

The biotech sector is in a bear market down in excess of -20% off the July top at 402. The -10% correction occurs at 362 which was also a failure of the 20-week MA support. The -20% correction is at 322 with price down to 304 currently now down -24.4% from the top.

The red rising wedge pattern, overbot conditions and negative divergence all indicated a major top for biotech in July, as Keystone had forecasted at the time with the charts, which occurs. The collapses from rising wedges can be quite dramatic and the biotech stocks are not disappointing. Note how price is extended above the moving averages requiring a mean reversion (purple dots) which occurs just as day follows night and night follows day.

The price low is comparing back to the August flash crash and back to late 2014 levels. The daily chart is positively diverged which agrees with the possie d for the stochastics in the weekly chart above so a bounce in biotech stocks should be on tap for the coming days or week or two, however, the red lines for the indicators show a weak and bleak profile so IBB likely wants to print lower lows in the future weeks after any short term bounce occurs.

The green falling wedge pattern may develop as the days and weeks move along with price trying to hold the support at the 100-week MA at 292. The 275-280 level is also a downside target since it is key price support/resistance and perhaps price will explore this level as the year ends and new year begins. 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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