"There is no real market fear until it hits biotech"...

I'm on record as saying that until we see some panic selling in biotech (darling exponential margin based Ponzi ETF), the deleveraging has not begun.

In my most recent post on IBB I modeled a gap fill into blue two.  It seems that this did in fact occur as you can see from today's snapshot below. 

There is a possibility, albeit a small one, that the W3 on IBB was only W3 OF 3.  Which would mean that black 5 was really not the peak.  If that turned out to be the case, this "groundhog day" indicator ETF would likely rise to $365 and the DJIA would rise too.

So I think we are at a critical decision point for the markets: treat this latest move as a deep 2nd wave retracement of the kind that forms a bearish declining double top (DDT) or break out to new highs. 

Note that the DJIA is in the same decision point.  It had what could be counted as 5 waves down and then 3 waves up (or nearly so) with those retracement waves eating a bit further up than I am normally comfortable with calling a retracement wave.  Usually the 61.8 is it, past that I give up.  But after a long uptrend like the one since 2009 it is acceptable and in fact common to see the wave 2 retracement play out as deep vee.

So I think we might have a very simple trigger here: If IBB can break out to a new high tomorrow, and it is very, very close to doing so, then if get your bull on (I would go for RUSL or JNUG), at least for another couple weeks.  But if that gap fill holds as the peak for even 1-2 trading days then the odds go up dramatically that a very significant peak for equities is in.

This chart makes me wonder if we get any follow through on the DJIA at all tomorrow or if it will be down at the open.