Biotech On Edge:

Many market prognosticators have been stating that biotech has been holding up better than the general market. Over the last 3-month period the XBI has been essentially UNCH down 1.7% (the larger cap IBB has been lower much more to the tune of more than 6%, and that is with GILD recently recording a powerful 9-week winning streak). Comparing that to the Nasdaq that looks “healthy” as the tech-heavy benchmark is off 7.1%. But keep in mind a decline is a decline on an absolute basis even if it shows strength relatively speaking. During Q4 ’22 one can see on the XBI chart below it basically has been making higher lows. Against the market, the XBI did not make a lower low in early October like the Dow, S&P 500, the Nasdaq, and the IWM. The XBI is still in a downtrend, so guilty until proven innocent, and one should be very cautious until the 84 level is taken out to the upside. Give it credit for recording just one back-to-back WEEKLY loss during the last 3 months of 2022, but there is nothing wrong remaining on the sidelines until the fund can prove itself. Select leaders can be played on a tactical basis.

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