This update on the Biotech iShares works as both an NFTRH+ update and a regular update.
For the purposes of our regular updating, a breakout here would indicate that speculative bullish money is spreading out to Biotech, which helps the rally’s internals and speculative inputs.
This stock rally is confounding a lot of people who are looking at valuations and central bank propping and calling for it to fail. But it is rotating around from sector to sector and it is trying to do exactly what we have been saying its mission is… suck people in. We have noted that short-term broad market risk is high and from that can come a downside reaction or a speculative upside surge. If Biotech fails the break out we’d have a whipsaw corrective scenario. If it holds the breakout it could argue for more manic upside in stocks.
For NFTRH+ (trading purposes) we note the break above resistance and a target of 340 based on the pattern measurement on the weekly chart. This is conditional upon IBB closing the week above 289 preferably, and the weekly EMA 40 (currently 284.22), definitely.
IBB got above the EMA 40 last week and this week it is making new highs off the correction lows. MACD is negative but up triggered, RSI looks good and AROON has just popped to indicate a positive weekly trend in the making.
The daily chart shows the SMA 200 at 285.47, coinciding with lateral support that had acted as resistance several times in 2016. That is a key breakout and and would also be a key ‘stop loss’, which I think should be kept pretty tight.
The weekly EMA 40 (284.22) and the daily SMA 200 (285.47) are in confluence and paint 284-286 as a very important support area.
For those interested in Biotech for a trade…
Buy Target: 284 to 290
Sell Target: 340 (or anywhere lower that profit is acceptable)
Stop Loss: Below 284 to suit risk tolerance.
A reminder that chart based NFTRH+ updates are technical trade setup ideas, which may not be revisited as the buy, sell, stop parameters are already noted. They are meant as a starting point for further research if interested. I will not personally buy every item highlighted and will sometimes sell – without prior notice (because this takes time and resource away from NFTRH’s main functions) – any item that I do buy, below target, which is something I often do as a trader. Also please be aware that I am not a fundamental stock analyst. Due diligence is your responsibility.