Sunday, April 10, 2016

IBB Biotech ETF Daily Chart C&H

Oil and the stock market bottomed on 2/11/16 and staged a very strong rally. Note, however, that biotech stocks did not participate in the party instead staggering sideways like the town drunk. Biotech stocks did breakout to the upside last week with traders chasing into biotech since most everything else had already moved substantially higher. The blue lines show a funky H&S (head and shoulder) pattern but also the green lines create a cup & handle (C&H) vibe. Either way, the bottom is 240 and break out line at 270 so the math is easy with a 30-point difference. The patterns target 300.

The stochastics are overbot and negatively diverged which created the two days of selling to end the week. The other indicators are long and strong, however, wanting to see higher highs in price after any pull backs occur, in this daily time frame, so the trek to 300 may continue. Note the congestion at 280-290 from January where price stalled last week. The IBB may need a couple tries to chomp up through that resistance cluster.

The 200-day MA is 319 moving lower. If you project out to later this month and May, price may be targeting the 300 level while at the same time the 200-day will drop down towards 300-310 helping solidify this upside target zone. Typically, after a breakout of the patterns, price will come back for a back kiss to make sure it then bounces and wants to move higher, thus, price may back test the 270 level early or mid week this week and that may be a time to consider a long. Keystone has on position in IBB right now.

The weekly IBB chart has a sideways vibe to it and the monthly chart appears to prefer a downward bias moving forward on a long term basis. Thus, the daily chart says up in the short term, say during this month, but price may top out in the 300-320 area in say, late April or during May, and that may actually be a great time to place a short for the weeks and months forward into the Fall but the chart can be updated as time moves along. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

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