Biotech has been a nagging pain for the market
- Posted by Greg Harmon
- on July 12th, 2017
Healthcare has been one of the last sectors to join the move to new highs. And Biotech seems to be the focus of attention. Despite hearing of a biotech stock breakout what seems to be nearly every day, the Biotech Index ETF, $IBB, is still 20% below its peak value from mid 2015. But it is not all bad news. Things have been looking up lately. So will there be a new all-time high in the future?
The chart below tells the story. From that high in 2015 there was a two step move lower to the 200 week SMA at the beginning of 2016. That has held as support outside of a couple of weeks ever since. Several higher lows later, it had bounced off of resistance around 300 a few times, a make shift ascending triangle. Four weeks ago it broke through. That established a target to 360. It made it to 323 on the first push, before pulling back.
The pullback has now retraced 38.2% of the step higher off the 200 week SMA. As it settles the momentum indicators are also holding and reversing higher. Both the RSI and MACD remained in the bullish range through the pullback. A Measured Move higher gives a second target to 350. Those targets just happen to be at the last two peaks on the way down. Not quite back to the top at 400, but moving in the right direction.
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Gregory W. Harmon CMT, CFA, has traded since 1986 and held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)