A trend is not over until the trend is over. Lately there have been many posts, research and articles discussing the end of the Biotech rally. Okay fine, but the charts at least, have not indicated that yet.
While the Biotech sector has not resumed its short-term uptrend after the mini blow off, it is holding the 50 day moving averages and has not even touched the lower channel yet.
Weekly BTK never hit the Arc line. From NFTRH 337:
Market leader Biotech has dropped, but is not broken yet. Certainly not by the weekly chart we usually review, but also the daily has not lost the 50 day averages or its uptrend. AROON (trend) has ticked negative, but it has done that several times during the ongoing bull trend. Looking through the ‘Jobs’ report, if the market’s reaction is negative we should watch BTK and other leading items like the Russell 2000 and Semiconductor Index for negative technical indications. RUT is stable and the SOX looks suspect.
Here is the standard NFTRH weekly chart of BTK. As for the other indexes mentioned, the situation as it was last weekend; RUT is stable and SOX is still suspect (below its 50 day averages).
As for personal positioning, Biotech and/or Specialty Pharma were my only stock market positions as of last weekend because the charts of the ones I held told me not to stop holding them. Hence, I got rewarded with some nice news on one of them today and a chart pop to go with it.
Yesterday OMED dropped below the 50 day averages, just in time to get some Eli Lilly collaboration news. I ignored yesterday’s drop below the 50’s because one day does not make a breakdown (or a break up, like today, for that matter). That is day trader stuff.
This thing has been up trending since I bought it (trading several times in the interim) for a year end tax loss play back in Q4 2014. So I have remained constructive on it, as with the sector itself.
All of this said, I am going to do what the market says and if Biotech breaks down I’ll be fine moving on from it. If not, I’ll hold some or all of what I hold (a couple others have better looking charts than the sloppy thing OMED’s has become).
This year the theme is definitely not to put ego or emotion into things. Whatever the market says will go, and that includes the precious metals. There are predictions, warnings and touts of all kinds flying around today. Throw in the Fed’s clown show and you should definitely have the b/s detector set on its most sensitive level.