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Barrons: Why Biotech Stocks Are Finally Set to Break Out

Paid article, but here's a bit of it. I believe Biotech needs a wave of M&A activity to satisfy their dwindling pipelines. Hopefully, cannabis will be removed from Schedule 1 and they feeding frenzy can begin.

The iShares Nasdaq Biotechnology index ETF looks strong. What’s next for Celgene, Biogen, Myriad, Gilead.

By MICHAEL KAHN
Feb. 21, 2017 5:21 p.m. ET
It’s still a little early but biotech seems ready to break out from its long malaise. Some investors expect biotech will beat the S&P 500 this year. The technicals are finally lining up for the bulls and all that is needed is the market’s blessing in the form of a price breakout.

The question asked by non-chartists is “Why wait?” The answer comes from technical analysis textbooks telling us that until the market actually makes its initial move all we have is churning beneath the surface.

But that does not mean we should ignore the churn. Rising indicators tell us buying pressures are indeed building.

Right now, the iShares Nasdaq Biotechnology index fund (ticker: IBB) sports a number of positive-looking indicators (see Chart 1). Volume-based indicators, such as on-balance volume, now reside at levels last seen in late 2015. Momentum-based indicators, such as the relative strength index (RSI), are trending higher. And moving averages show “proper alignment” for a rally with price above short averages and short averages above long averages.

http://www.barrons.com/articles/why-biotech-stocks-are-finally-set-to-break-out-1487715663