As I surveyed the carnage of the recent market smash, I noticed that one leading sector cracked in a big way, making one of its members especially ripe for a huge fall.

The popular Select Sector SPDR Health Care ETF (NYSE: XLV) was absolutely destroyed on the open Monday. At one point, it was down over 21%, albeit for only a short time. That is what I call a stampede for the exits in a sector that had been a leader until the past month. In other words, the desire to sell was so great that people were dumping shares “at any price.”

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The ETF closed down “only” 4.3% that day as the market’s panic subsided. However, the damage was done. The market rout resulted in prices slicing through the 200-day moving average like a hot knife through butter. Support levels going back to March were also penetrated. 

Game over. The health care bull is dead.

Ireland-based health care and life sciences company Allergan (NYSE: AGN) is a member of XLV with products ranging from contact lens solution to Botox. The stock has been rallying steadily since 2008, moving from roughly $20 to over $300 earlier this year.  

Even as the broader market moved sideways for most of 2015, Allergan kept chugging along, albeit on a choppier path. On July 27, the company made a deal to sell its generics unit and the stock leapt, scoring a technical breakout through resistance and hitting a high above $340. It seemed all was still going well.

But on Aug. 6, shares suddenly fell, giving back that gain even as the company posted a second-quarter earnings beat. Bad performance on good news is bearish, as is failing to hold a technical breakout. The writing was on the wall.

So the trend was already down heading into the recent market smash. Even though AGN traded in the green at one point Monday, AGN was clearly a broken stock in a broken sector. It even fell below a trendline drawn from the last market rout, which came in October 2014, sparked by the Ebola scare. 

Now, that trendline provides a ceiling above prices where short selling could be a low-risk trade. In other words, we can keep risk low by placing a stop-loss close above. Meanwhile, with little technical support on the chart until the October low, which is roughly 30% below recent trading, the potential for short-side gains is large.

The caveat, of course, would be that the market is not broken and Wednesday’s rebound is more than just a dead cat bounce. But since stock performance is greatly dependent on sector and market performance — and both now appear broken — then the path of least resistance remains to the downside. 

The falling short-term trend, a generally weak September-to-October period and the looming possibility of a rate increase by the Federal Reserve paint a bearish picture. 

With the size of the potential gain here, I would enter a position now rather than trying to time the ideal entry point.

Recommended Trade Setup:

— Sell AGN short at the market price
— Set stop-loss at $320
— Set initial price target at $209 for a potential 32% gain in two months

Note: An expert who accurately predicted the current correction back in early July is saying all signs suggest things are about to get a lot worse, fast. While others mocked his initial call, he and his readers got prepared. And they laughed all the way to the bank, booking annualized gains of 2,036%…. 2,796%… and 3,080% as stocks fell. He believes the coming weeks could be even worse. Find out how you can prepare now.