Healthcare Sector Review: 1/31/24

Articles From: ChartSmarter
Website: ChartSmarter


CMT, Chartered Market Technician

Biotech Feels Firm:

  • As with an abundance of big tech firms REPORTING earnings this week, it may be wise to pivot one’s attention to some overlooked parts of the market to potentially capitalize. The biotechs did record a powerful run last year in harmony with the overall market and they have since stalled. No one would fault those who are skeptical given their history, and therein may lie the opportunity. The WEEKLY chart below shows just how well the fund has been holding up at the very round 90 number. The prior 3 times it has tested that level witnessed drawdowns to 75, 72, and more recently 64 late last year, and note it started descending almost immediately. This is now the 6th week it is “glued” to 90 and I think that is encouraging for a move toward par in the near term. The period of the summer of 2022 and the present move to 90 was very similar, each taking roughly 9 weeks, and again the fact that it is keeping this altitude near the figure is a good sign. Some of the large names in the IBB are behaving themselves very well too with the AMGN bull flag, which has found support at the very round 300 within the formation. VRTX has broken above a bull flag and there has been plenty of M&A activity in the entire biotech arena. Taking a peek at the annual returns of the XBI over the last several years shows last year was the first single-digit move since 2017. Is it ready for another strong double-digit advance in 2024?
XBI stock chart

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Originally Published January 30, 2024

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