Biotech Making a Move Higher

Biotech stocks were the place to put your money out of the financial crisis. Their historic run continued into mid 2015, a 6 year move higher, until they peaked. The pullback from that top found a bottom in 2016 and prices stagnated in a range. But toward the end of that year Biotech stocks started to move higher. They continued higher until about September last year and then stalled. The price action since then has morphed into a sideways consolidation.

That sideways price action is shown in the chart below. It shows that the initial surge up met resistance at a 61.8% retracement of the drop from the 2015 top. It pulled back then to the 200 day SMA before a slightly higher surge and pullback. Then a move to a lower high in March reversed back to that same low. Lower highs, so why is it ready to move up?

The answer starts with the purple line. When prices moved over the purple line they confirmed a short term double bottom. Notice that price also moved over the falling trend resistance, another positive. The Bollinger Bands® have shifted to the upside and momentum is building. The RSI is in the bullish zone and rising with the MACD moving up and positive. This could certainly be just another move to the top of a consolidation zone. A move over the March high around 115 would suggest that is not the case and over the January high give confirmation.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.