Don't Ignore This Chart!

Big Biotechs Lead in December

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December got off to a rough start for the broader market, but several big biotechs bucked the selling pressure and moved higher. The Perfchart below shows December performance for SPY and the nine biggest biotechs in the Biotech iShares (IBB). SPY is down a fraction over this period and this reflects weakness in the broader market, especially large-caps. Among the biotech stocks, seven are up in December and only two are down. Vertex is down sharply with an 8+ percent decline and Gilead Sciences is down around 2%. Biogen (BIIB), Celgene (CELG), Alexion (ALXN) and Mylan (MYL) are the upside leaders with 4+ percent gains. 


 

The next chart shows the Biotech iShares (IBB) holding support near the mid November low and bouncing with a gap on Tuesday. The ETF followed through on this gap with a 2.25% gain on Wednesday. I am impressed with IBB because it showed relative strength during the early December decline. The S&P 500 SPDR and many other ETFs broke their mid November lows, but IBB held above this level and did not break support. The price relative (IBB:SPY ratio) confirms recent relative strength because it has been rising since October 22nd. 

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--Arthur Hill CMT

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Arthur Hill
About the author: , CMT, is a Senior Technical Analyst at StockCharts.com. Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed market technician. Arthur has written articles for numerous financial publications including Barrons and Stocks & Commodities Magazine. In addition to his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Business School at City University in London. Learn More
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