Well, if my wave count is correct, biotech is ready to crumble. Here's the back link to my prior IBB model. The wave did begin to break down but only into an E of B. The C wave (C of 2) is now playing out and I do not model a higher high as being possible here. Instead, it likely fills the gap shown by the pink rectangle (a very deep vee 2nd commensurate with the power of this Ponzi scheme ETF) and then begins to freefall.
Nobody and I mean nobody is saying that a breakdown like I am modeling is even remotely possible right now. In fact, quite the opposite. They are wondering how anyone can even imagine it. I mean, we have all these aging boomers who need increasing amounts of medical care and biotech is synonymous with that, right? Well, this kind of thinking is what passes for fundamentals these day but it's just herd-think. The herd is convinced that the current trend will continue forever, trees will grow to reach the sky, etc. It is a weakness of the herd, built in and unavoidable. People get emotional, they get giddy about how much their account has gone up and they forget to look at the chart and notice that it has gone exponential which is always a clear sign that leverage (margin debt) was used to pump it up there. This ETF was $60 back in 2009 and it will likely fall below $60 in a full mania retrace before 2018 (when the economic world is set to end according to my TDAmeritrade indicator ; ) Note: I'm only half joking about that.
In any case, the Jan 2017 $150 puts are going for $7 at the ask. If you catch it tomorrow during the final day of the DJIA rally into wave 2 then perhaps someone who thinks trees will grow to reach the sky will part with them for $4.50-$5.00. That's a 20 bagger if they just go down to $100 before expiration and at least a triple if the shares just do an a-b-c pullback to the level of the prior 4th @$200.
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