Mish’s Daily: Can Biotechnology Make a Seasonal Move Higher?
Mish’s Daily: Can Biotechnology Make a Seasonal Move Higher?
Written by Michele ‘Mish’ Schneider
I have commented but not focused too much on our Big Brother Biotechnology, IBB.
My weekend comments were, “IBB remains stuck in its weekly trading range. Remember, the longer the range sustains, the better the move out of it tends to be. IBB gets interesting over 150.”
So what about that trading range and current levels?
The Daily chart has several technical indicators.
- 1. Price in candlesticks.
- 2. The July 6-month calendar range high and low (green and red horizontal lines).
- 3. The 50 and 200-day moving averages (blue and green).
- 4. Triple Play or Leadership Indicator.
- 5. Real Motion or Momentum Indicator.
I pick out this sector in the Economic Modern Family as the weather gets colder.
We went to Costco this weekend, and the checkout person overheard me talking about buying toilet paper, or not buying it as they were out of Charmin.
She said, “You should buy what we have since its amazing if we have anything left as the return of Covid has folks hoarding the stuff again.”
What resonated with me was not the public hoarding mentality, but rather, the return of winter ills and chills.
What does this mean for Biotechnology (and I guess toilet paper as well)?
In the list of indicators, I draw your attention to Leadership.
From July until early August, IBB was outperforming the benchmark.
Since then, SPY has well outperformed.
While the price has not done too badly maintaining a trading range between 142-150, I am seeing that that wall of support since early August at 142 could be key.
Currently, IBB trades beneath the July calendar range high.
It has begun the week under the 50-DMA.
Momentum with the red dots under the 50 and 200-DMA shows a bearish divergence.
Yet, something about the chart looks compelling.
Clearly a breakout over 150 could be a game changer.
In the meantime, watch 142 to hold. And have a look at this:
The last time IBB had a weekly golden cross was in 2017. After that the bull phase on the weekly charts lasted until October 2022 or exactly 2 years ago. Now, a golden or bull cross looks like it’s ready to reemerge -with the price not too far from the moving averages for a relatively low risk.
Educational purposes only, not official trading advice.
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ETF Summary
(Pivotal means short-term bullish above that level and bearish below)
S&P 500 (SPY) 575 support 585 resistance
Russell 2000 (IWM) 215 support 227 resistance
Dow (DIA) 435 next? If holds 425
Nasdaq (QQQ) 485 pivotal support 500 resistance
Regional banks (KRE) 60 pivotal
Semiconductors (SMH) 242 support 265 resistance
Transportation (IYT) 69.50 support
Biotechnology (IBB) 142 support zone 146.50 resistance
Retail (XRT) 78.99 would be the highest monthly close since 2022
iShares iBoxx Hi Yd Cor Bond ETF (HYG) 79.50 nearest key support
20241022
