A week ago, I wrote a blog article titled "The Beauty of the Biotechnology ETF Channel." I began by writing, "If there is one area to watch should the market have another run up, it is Biotechnology (IBB).
"The channel lines that are perfectly parallel, going back to 2015. Since this is a weekly chart, what matters most is the weekly close."
Last Friday, IBB did eke out a close above the weekly channel closing at 128.41. Therefore, it is no surprise that, today, IBB took out the 2015 highs and rose over 4%. Where might it go from here?
What makes this a tricky environment is that the indices are not near all-time highs. Even the NASDAQ 100 is up on the year, but all-time highs are at 237.47.
When you look at the Russell 2000 IWM or the Dow DIA, both have improved, but neither is anywhere near their all-time highs. That makes you wonder, who do you believe?
Furthermore, do we discount the old-world order and make way for the new one, where technology designed to keep us away from others reign supreme, while the old essentials become obsolete?
Now, if we flip that logic, IBB, until today, made its all-time high in 2015, whereas most of the other sector ETFs did so in 2018-2020. Does that mean that this sector, too, is part of the new world and, thereby, running on its own fumes? If so, then perhaps IBB has a lot more upside regardless of IWM or DIA.
This much is clear: 128 is a good line in the sand.
Today I made my debut on Yahoo Finance's "The First Trade." I look at new concepts in our pandemic world by examining small cap stocks and ETFs worth watching. Click here to watch.
- S&P 500 (SPY): 294.88 last swing high, 288.00 support
- Russell 2000 (IWM): 128.50 support, 136.85 last swing high
- Dow (DIA): 240 support, 247.67 last swing high
- Nasdaq (QQQ): 229.32 a gap to fill. 220 support
- KRE (Regional Banks): Looks weak until it can clear and hold 36.50
- SMH (Semiconductors): 133 support, 139.36 last swing high
- IYT (Transportation): Has to hold 143.50; 155.60 last swing high
- IBB (Biotechnology): 128 major support
- XRT (Retail): 38.43 last swing high. 36.80 support
- LQD (iShs iBoxx High-Yield Bonds): Broke the 50-DMA, which could be a bad sign for the market
- GLD (Gold Trust): 3rd inside week - big whichever way it breaks
Mish Schneider
MarketGauge.com
Director of Trading Research and Education
