Hillary gets blamed for healthcare + biotech sell off [IBB]

Ridiculously, Hillary was recently blamed in the media for crashing healthcare and biotech stocks by tweeting that she planned to "make a plan" to address niche drug price gouging.  You have to be insane to believe that Hillary has that kind of power.  Hillary's growing irrelevance and desperation becomes more obvious every day.  The very idea of reading the news each day to figure out what laws to make tomorrow is ridiculous.  It shows no leadership at a time when that is what the herd desperately needs.

Healthcare and biotech sold off because they are catching down to the broader markets.  The transports and the small caps were the first to begin the sell off and many of them are in clear bear market territory already, down 20+%.   You can see the weakness in that sector began way back in Dec 2014 and has been growing since then.



So, the sectors all have slightly different timing and long ago I pointed to IBB  and wrote that there is no real market fear until there is fear in IBB.  Healthcare is in the same boat.  This is because everyone is looking at the boomers  are retiring and will need more medical care.  Of course the ridiculous valuations seen in those sectors reminds me of a geriatric version of dot bomb.  Hospitals used to be low margin deals just like banks.  The credit mania has turned that on its head and when the credit mania collapses I assure you that it will right itself.o

In the case of IBB (backlink) we had what looks like a strong double bottom at the support shelf shown by the upsloping red line.  But they were so quick and thready that I would not put much faith in them holding.  If we are nearing the bottom of 5 of 1 in the DJIA then I assume what will happen is that the next wave of selling will see IBB break this support and bottom at the 38.2.  Then the buy the dip crowd will pile back in with high hopes that the bear is over and now back to the races.  If so then the bounce to the prior 4th could look as shown in red in the most optimistic case.  Remember, wave 2 is often the incredulous wave, the one where the herd does not yet believe that the worm has turned.  This is why Prechter teaches that wave 3 is the recognition wave where the herdphoria(c) begins to turn into herdsperation(c).

Time will of course tell but if you think there is any "fundamental" value in stocks then think again.  It's all about the mood of the herd and the Elliott wave model says that we are due for an emotional migration south.