From the desk of Tom Bruni @BruniCharting
If you’ve been reading our content over these last few weeks, you’ve likely noticed we’ve been performing a lot of deep dives on the sectors we want to be involved in on the long side like Solar, Energy (premium), Retail, and Software (premium). Healthcare in general has been a laggard and the Medical Device space continues to lead, but now we’re seeing Biotechnology start to break out as well. In this post we’re focused on the equal-weighted Biotech ETF $XBI, as the cap-weighted $IBB is lagging significantly and remains weak. This out-performance by the equal-weight sector ETF signifies a broad-based rally is underway, so we’re looking for the best names in the sector to take advantage of this theme.
As the daily chart below shows, the XBI has tried several times over the last six months to clear resistance at its 2015 highs of 91. It’s failed to hold this breakout twice before, but is taking another shot at it. The fact that the broader market has found its footing again should be a decent tailwind for this trend to accelerate and confirm a successful breakout. Our 120 price target for this breakout is approximately 30% above current levels, so in the rest of this post we’ll be looking at some individual names that look poised to lead this sector higher.
Click on chart to enlarge view.