vlad.adrian
Short

Biotech sector - Massive divergences on the daily chart

AMEX:BBH   MARKET VECTORS BIOTECH ETF
87 0 3
A while back, I suggested that the biotech sector should be watched very closely (you can check out the chart below). Well, I was a bit too early. The shorting signal came 2 weeks later, but I didn't take the trade anymore. My original analysis told me to look for a shorting opportunity right at that time, not two weeks later. Now, there's a different picture on the BBH             , even more bearish!

The weekly chart doesn't say anything, except that the strongest sector in this multi-year rally is now weaker than the overall market, and that a few months ago there was a change in behaviour according to the massive volume and huge downticks of the MACD histogram
snapshot
.

The daily chart offers too many bearish signals. Look at my new power tool, the Weis Wave, invented by David Weis, based on Wyckoff's studies, cloned by LazyBear. Look at the volume on the last two waves toward the double top, compared to the previous up moves. On the last wave, volume is incredibly low! Look at the MACD histogram, which has drawn now a double class A bearish divergence. Look at the MACD lines, at that class A bearish divergence. Look at the rejection of a major psychological level, 100$. Look at the Double top formation, with a false upside breakout. Look at the candlesticks patterns, first an abandoned baby and then an evening star formation, with the third candle completely engulfing the first!! Many 'look' and as much bearish signals. Because this looks so bearish , I have set the target very close. I don't like when a chart looks too good to be true, I get carried away. This definitely looks too good to be true for my trading system!
I haven't decided where my stop is going to be, either above 99.30$ or above 101$. I will decide tomorrow when I will take the trade. If there will be a big gap down, I may pass because it might be too much to carry.

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