A Bearish Warning
The stock market has fallen hard since May 3, 2011. Most sectors and stocks never escape the claws of a bear market. Today's chart of the day is ticker symbol $XBI , the S&P Biotech ETF. The chart, in my opinion, provides a warning that the resumption of the bear trend is underway in the Biotech sector. It also clearly illustrates an ongoing five wave sequence.
At the weekly chart level, XBI completed cycle w.b at $75.93 and fell hard along with the broader market. To date, three waves have been completed, possibly four if w.(4) doesn't turn into a complex pattern.
If the interpretation is correct, and w.(4) is complete, then price should make a new low to where w.(5) = .618 w.{(1)-(3)} at $51.32 to complete w.1 circle.
As the wave pattern and count suggests, a long term bearish view of this ETF would be appropriate that eventually draws price well below w.a ($42.95).
I'll be making periodical updates to this post for those readers who are interested in following along.
Best of Trading
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