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Bio-Tech was tons stronger than the broad markets from 2011 to 2015 at (1) above.
Once support broke and Bio-Tech kissed the underside of resistance at (2) above, sellers stepped in and this leading upside sector, now has been a leader to the downside since July of 2015. Once weakness started taking place in this sector, broad markets did the same.
Now Bio-Tech IBB could be forming a “Bearish Descending Triangle” with a key test of support taking place right now at (3) above.
No doubt support is support until broken and support still remains in play at (3).
If sellers step forward and IBB/SPX breaks support, it would reflect new found downside leadership from this key sector, which could spill over into the broad markets.
We humbly feel that the next big move to take place at (3), could well impact portfolio construction heading towards year end.