Trouble Getting High on its Own Overhead Supply

The concept of "overhead supply" is one which is often eschewed and castigated during bull markets, since any apparent inkling of price resistance is often thrown by the wayside as demand overwhelms supply to push those bull horns up.

Eventually, though, overhead supply rears its head and begins to matter in a major way. (For those interested in what overhead supply specifically is, and why it matters from a psychological perspective in markets, I ran through the full analysis for Members in my Weekend Strategy Session on the Premium site). 

And when overhead supply matters, simply put the game changes. 

Case in pont; The IBB, ETF for the biotechnology sector, failed to reclaim the all-important $370 level (purple lines on daily chart, below), coming close to it late-last week. The light blue lines denote a bearish wedge looking to now break down today, even with the broad market rallying at the open. 

With former darlings like BLUE getting decimated today, and the major biotechs like BIIB looking vulnerable again, biotech is wobbling under broad market pressures even though it had been holding up better than other sectors of late.

As is an ongoing theme, the issue is whether the leaders hold out and take us higher into year-end, or instead succumb to the market issues and eventually break lower yet. 

For now, biotech looks to have issues getting high on its own overhead supply.