Biotech Rebound?

Markets always do their best to confound the most and the move from the biotech sector to end last week was powerful, despite the red wave that never quite materialized. Of course, a rising tide that occurred last Thursday lifted nearly all boats, but the XBI cleared a key area of resistance in the 200-day SMA. It could prove to be a bull trap as it did for a brief period in early August but give PRICE action the benefit of the doubt. Is it a sign of “risk on” in the healthcare sector coming back? Or is growth attempting to make a stand against value? Some of the big pharma names did not follow through Friday with stocks like MRK LLY and BMY dropping in the 4% neighborhood. Biotech names that continue to behave bullishly include AMGN which rose 5% last week and a gap fill from the 11/7 session should be viewed as an opportunity. Another chart that has caught my eye in the overall healthcare space is ISRG. It has advanced 18 of the last 23 sessions with 3 of the last 4 weeks up by double digits and CLOSING near the top of their WEEKLY ranges. Look for a move to the very round 300 number into year-end which would fill an upside gap from the 4/21 session after its robust bull flag breakout Thursday.

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