A Big Move in Biotech

Lately, most of the news and headlines have been focusing on what hasn't been working in the stock market.

This has become even more apparent after the one area that was working the best (energy) got hit hard over the last few weeks.

But, there are some other areas that have started to rise from the ashes. Some of the worst-hit stocks are starting to show signs of life. 

One industry that was hit extremely hard after topping out in February 2021 is biotechnology.

The biotech ETF XBI sold off more than 60% while many individual names went down even further than that.

But lately, biotech has been on fire and has been a great place to be over the last few weeks while past leaders continue to struggle.

What I like most about horizontal support in technical analysis is that it provides a very clear area to manage your risk. You know exactly when you are proven wrong.

You can see on a weekly chart of XBI that buyers stepped up at a major area of support that has held up since December 2018.

If price was to fail at this area of support then you know that you are wrong and can take your medicine and move on.

It's difficult to say how much longer this rally can continue but it has been a very healthy move so far and we've been taking advantage with multiple winning trades in XBI and the levered ETF LABU.

Maybe we are beginning to see some appetite for risk returning to the market?

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Nothing in this blog post should be considered investment advice and is provided for educational and entertainment purposes only. The commentary and information represent the opinion of the author and are not recommendations to buy or sell any security or investment product. The author may or may not hold positions in the securities and investments mentioned. Full disclaimer here.