Biotech Wreck? This video shows you how to put your seat belt on. (October 26, 2016)
IBB XLV CELG GILD LABU LABD XBI IBB
In this video I want to look at Biotech ( NASDAQ:IBB ). What rhymes with wreck? Botech. Here is the deal: We are seeing a lot of negative divergences in Biotech ( NASDAQ:IBB ), it has been trending down for quite a while here. But I am looking at, effectively, kind of like a triple top here and at the same time MACD (moving average convergence/divergence). This is now trending lower, it is below the midline, which is not a good thing unless you are short. And so after this type of consolidation in Biotech ( NASDAQ:IBB ) you get a little breakout and that turned out not to work too well, and now this is moving lower.
Now, we can look at other aspects of the healthcare industry like the XLV ( NYSEARCA:XLV ). This is not all Biotech ( NASDAQ:IBB ) stock, not by a long shot. Though there are some in there. But this is another one where the momentum is now lower. You can see that in the chart. You can also see this in this indicator, which has been trending lower for a while. It is below the 200-day moving average and now it is just about ready to crack this support level from June after this rally.
Now here is the deal: I honestly don’t give a rip what these companies report in there earnings, I really don’t. Because as soon as they report it it is in the rear-view mirror, people are looking ahead. And with the presidential election looming, I think a lot of nasty stuff for healthcare has BEEN in the process of being factored in. Not too many people, other than Heather Bresch, the tap dancer from Mylan, are real happy about prices going up. And so there is going to be a lot of rhetoric. I don’t know about laws, regs, this or that, not my deal. But let me put it this way: There is not going to be a darn thing that is bullish that is coming out to the Biotech ( NASDAQ:IBB ) or the healthcare industry.
We won’t talk about Obamacare because that is not my point. My point is, again, nothing positive coming out of the healthcare industry. We look at Celgene ( NASDAQ:CELG ). Great! They report earnings tomorrow. Fantastic! If this stock gaps up, maybe they report off the chart earnings, literally the stock gaps up to $140.00, sell this thing. If it gaps up to the 200-day moving average, sell it. If it gaps up to here, sell it. If it falls down to here, sell it. The bottom line is, this has been drifting lower for a while. Sideways consolidation with a little fake out here above the 200-day moving average. So I think this just does not work.
Another one is Gilead ( NASDAQ:GILD ), which has BEEN not working for a while. This is like a union on strike here ( nothing against unions, nothing much), after this peak here. So now what had been support by the 200-day or 40-week moving average is now resistance. So this is a stock that you don’t want any part of. And just think about the triple ETFs. It is like, triple your fun here.
The LABU ( NYSEARCA:LABU ), which has been a crowd favorite as long as it was moving up, is now, like a dog. Nobody wants this and it is showing it. It was down today, in a fairly flat market, 3.5 percent. We will look literally on the other side of the chart, almost 3.5 percent to the upside. So if you are a triple ETF guy or lady (or gal, but you can’t say that anymore because it is not politically correct). This is a stock that works. It is plenty liquid, it moves a lot though. Again it is triple the ETF, I think it is the XBI ( NYSEARCA:XBI ), yes. So none of these are working.
All I am saying is this: We are right smack dab in earnings season. I am just telling you, with biotech and healthcare the market looks forward, not in the reverse. And looking forward in biotech and healthcare there is no positive catalyst that I can see. Better earnings, this or that, I honestly just don’t see it. This is not an early call, not by any stretch of the imagination or anything else. Stretch whatever you want, this is not an early call by any chance. But what I am saying is, it is not a late call either. This stuff is IN process and I just don’t think you want to be here.
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