Healthy Breathing Space:

The composition of the two major biotech ETFs, in the IBB and XBI, remind me somewhat of the two widely recognized retails funds. The XBI resembles the XRT, in that they are more diverse in their holdings, and the IBB tends to be more top heavy with some representation among the mega caps (AMGN and GILD are the top 2 holdings at nearly 15% of the ETF). The diversification within the XBI led to a 50% gain in 2020, doubling the gain of the IBB. Below we take a look at the XBI, and the recent action looks like a prudent pause following a run from the very round par figure to roughly 150. Give the XBI credit for eking out a fractional gain Monday, on a soft tape. There could be some more selling in store for the biotechs with a bearish WEEKLY engulfing candle last week falling more than 6%, ending an 8 week winning streak. As the selling perhaps intensifies a bit this week, take notice off the names shrugging it off. They will most likely be your winners going forward in 2021.

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