Brian Shannon on $XBI (Nov 6, 2026)
XBI's bounce stalled below a downward-trending 50-day moving average and it appears to be forming a clear head-and-shoulders top. The speaker expects a break below the neckline, sees a continued decline from there as unlikely, and considers a short-seller trap followed by a turn back up the more typical path, though not guaranteed; if it breaks down and keeps falling, be careful.
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Biotechs also failed to move close to the 50-day moving average. This is what I told subscribers yesterday, that yes, we are seeing some bounce, but our 5-day moving average is still down.
Our 50-day moving average is also trending downward.
I think there could be a nice situation here and you can see I've drawn it , this is one shoulder, this is one head and this is the other shoulder. In fact, it's such a clear pattern that I think what's probably going to happen is it's going to come down , break the neckline here, and then everyone who's read technical analysis books will say, hey, that made a big top. It formed a Head and Shoulders pattern.
You know what else? Typically, you'll see it go down a bit and then it either keeps going down , which is unlikely, or it'll come back up , trap short sellers , steal the stops of those whose stop losses are below this big obvious level, and then we'll see it turn back up again.
This is how the head and shoulders top pattern usually works for major indicators. That doesn't mean it will always happen. So if it breaks down and goes down, be careful, but if it breaks down and then comes back up like this , then understand that it was a trap and then it is more likely to go up again.
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