Maturity Focus:

We like to sometimes compare the mature IBB to the more “juvenile” XBI to get a risk gauge for the biotech group. If investors are feeling somewhat apprehensive they may show some affinity for the IBB, and if they are not risk averse the XBI may satisfy their needs. Over the last 3 month period, the XBI is UNCH while the IBB is higher by 6%. Some of the top holdings have seen some forceful action with VRTX right at the top of that list as it trades at 52-week highs and in all of May declined just 5 sessions. What is most impressive to me is this week is ignoring last week’s doji candle as it storms ahead by 7% heading into Friday. My closeness to round number theory has me intently watching REGN and how it acts around the double bottom with handle pivot of 997.97. Thursday recorded a bearish shooting star and Friday will be an interesting WEEKLY CLOSE. Getting back to the IBB/XBI comparison, the latter trades 10% off its annual peak (IBB just 2% off its own) but this may gravitate back toward the very round par number if it can distance itself from its own inverse head and shoulders trigger here. Thursday’s dark cloud cover candle did not help but let’s see how it finishes Friday.

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