This Market is Homeless and Needs More Drugs!

• Posted by Greg Harmon
• on October 22nd, 2015

After 6 months of a sideways correction and then a pullback that has lasted for 2 and a half months, nearly nine months of corrective action, investors and traders are still waiting for a pop in the market to sell into. From an intermediate timeframe this seems crazy. If you wanted to short you should already be big in the money.

But sentiment is a fickle thing. It seems from the rhetoric that not many want to own it. It is homeless. When I look at this market I see that it is struggling. And the one thing it needs more of is drugs. So I agree with the homeless junkie above.

Well not completely. This market needs more positive news and price action from the biotech sector to get out of the doldrums. Biotechs have been a major leader in the market over the last two years. The sell off has struck a blow to the head of the Indexes, primarily the Russell 2000. But that drags them all down.

Look at that chart above of the Biotech iShares ($IBB). It does not look pretty. After the move higher and the short term fall in a channel it has gotten a worse look. The move lower in August was matched by the move lower in September. A second bear flag has built now and is about the same size as the first. This stinks of a 3 Drives pattern lower which would target a move to about 245 before it is all over. If that is the case then the broad market could be in a lower consolidation for quite a bit longer. Keep an eye here.

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