Good post, Jbem. I could feel the air starting to get sucked out of the biotech smallcaps last July-- i recall posting to you about this pertaining to that one stock pick, Soligenix, at the time.
This more than 50% collapse of XBI from July '15 highs has been breathtaking, especially the plunge since late Dec. (when i almost bought big into LABD, the 3x short of XBI, but didn't b/c i thought there might be a brief "Jan. effect" rally-- i'd be up more than triple on the LABD).
Yet, at some point this will turn. My sense is that biotech may reverse sooner than we think just b/c there are so many hedge funds that specialize in it and also because there are just too many tantalizing prospects for human health that emerge on the newswire each week. A few big acquisitions and bullish sentiment could quickly return to the sector.
But as i look at the XBI's chart going back to 2014, i cannot help but suspect that the "big boys" and their algos want to test those darn April 2014 lows in the upper $30s before letting the XBI reverse and maybe start a new bull run. Such a test of April lows obviously would mean another 12% drop or so.
