Ishares Nasdaq Biotechnology (IBB)

[TREND1]

BIOTECHS SHOW BROAD STRENGTH ... Relative strength in biotechs was a theme throughout 2014 and this theme continues into 2015. Chart 6 shows the Biotech iShares (IBB) breaking triangle resistance at the beginning of January and advancing to new highs the last two weeks. Broken resistance marks first support in the 308 area and the November-December lows mark key support in the 285-295 area. The indicator window shows the price relative (IBB:SPY ratio) in an uptrend and hitting a new high again this month.

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Chart 7 shows the Biotech SPDR (XBI) breaking out to new highs in early January, consolidating with a bull flag and breaking out today. When looking at these two charts, notice the difference in the holdings. IBB is dominated by the big biotechs with the top ten stocks accounting for 56.1% of the ETF. XBI, on the other hand, has over 80 biotech stocks and the top ten account for around 16%. XBI is much broader and the new high in this ETF reflects broad strength in the industry group.


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