Elliott Wave Analysis of IBB (Biotech Sector ETF) by Sid from ElliottWavePredictions.com. Click on the charts to enlarge.
A quick glance at a weekly chart of IBB (above) shows the obvious parabolic rise into the July 2015 top. Parabolic bubbles are followed by crashes, so is the crash in the Biotech sector already finished, as several of the talking head pundits on propaganda financial television suggest? Based on a combination of Elliott Wave and Hurst cycle analysis, almost certainly not. Utilizing Hurst cycle analysis (via Sentient Trader software), the next 4.5-year cycle trough isn’t due until about April of next year (2016). That target date matches up well with the Elliott Wave expectation that IBB should retrace back to the extreme of wave 4 at one lesser degree (207.48), the most common retracement target after a 5-wave impulse. Notice that if primary (burgundy) degree wave 4 is underway as an ABC (black) zigzag, and if black A and B are already complete, wave C would equal wave A times 1.382 at 205.38. This creates a tidy cluster of targets for the next significant bottom in IBB at the 205-207 range.
Moving to the 240-minute chart (above), the downward movement from the July 20 top to the August 24 low counts nicely as an expanding leading diagonal. Diagonals are typically deeply retraced, and it appears that a relatively deep .707 corrective retracement into the September 17 high is complete. From that high, I’ve labeled the 5-wave downward impulse into the Sept 28 low as minor (blue) wave 1 within intermediate (black) wave C. Based on the shorter term Hurst cycles, blue wave 2 is underway as an incomplete expanded flat. Minute (pink) wave A was a 3-wave affair into the Oct 5 swing high, so a 3-wave pink wave B is now expected to the downside. Wave B’s of expanded flats must retrace wave A by at least 90%, but a 1.382 relationship is much more likely. Pink wave B would equal pink wave A times 1.382 at 270.99. Then, wave C pink is likely to move to the upside, culminating where wave 2 blue would retrace wave 1 blue by a very common .618. That creates a blue wave 2 target of 335.61 on about October 28. The downward movement that follows should be quite aggressive.
This analysis of IBB generally agrees with my overall roadmap for the larger stock indices, as laid out on this website for many quarters. These “roadmaps”, created by utilizing a unique combination of Elliott Wave, Fibonacci, and Hurst Cycle Analysis are revealed and updated on many tradeable instruments in detail every week during my Sunday “Counts” webinars. Additional updates are provided to subscribers every Sunday and Wednesday with multi-timeframe EWP ScreenShots of SPX, DAX, Gold, Oil, Bonds (TLT), the US$ Index, and the Euro. Many investors and traders have found my analysis quite profitable!