Biotech Blues:
For a group that looked very promising just a couple of months ago, the space has fallen on difficult times. In the face of rising interest rates, it will be a tall task to mount a serious comeback. But as markets are accustomed to confounding the most, one has to be ready for when and if this sector rebounds. The daily chart of the XBI below shows the ETF losing the 200-day SMA, and we know the saying nothing good happens beneath the line. It can be forgiven for the time being as plenty of stops are put around the line, but it must recapture the secular line quickly. Taking a look at the MONTHLY chart the very round par number which was stern resistance on the daily chart, was also significant as it was the 50 MONTH SMA too. Notice how in February and March it was above 100 and the 50 MONTH SMA, but more importantly CLOSED below it (the line was between 2016-2020 and has now turned into pesky resistance). Bulls will declare that it is now coming back to retest the break ABOVE the bearish head and shoulders which could bring out some bids. The burden of proof is certainly is on the bulls here to get something going. First things first they need to reclaim to 50 WEEK SMA above 83.50. Until then caution remains warranted.