MONTHLY Consequence:

  • The biotech group inside healthcare has been a widowmaker for many. Each time it seems to get going it records some kind of letdown. Could the prospects be brightening? Looking at the MONTHLY chart below, next Friday becomes very important to witness if the XBI can CLOSE above the very round 90 number. Throughout 2022-23 it was above in February-April 2022, August 2022, January, June, and December 2023, and again this January but none of them CLOSED above 90. Consider this area a line in the sand. If by Friday of this coming week, the XBI can CLOSE above 90 it would make April and May a potential bear trap. The WEEKLY chart has some appeal as well with the bullish hammer candle and notice the first WEEKLY CLOSE above the middle line in the Bollinger Band since the big move last November (bullish ADX crossover from late April is still intact too). Peering at the daily chart the fund feels like it is undergoing a magnetic pullback toward the very round par number, an area where it failed miserably in late February and early March. It reset with a couple of spinning top candles at the 200-day SMA in late April and may just be rounding out the right side of a cup base.

Provider Peek:

  • The healthcare providers have been weighing a bit on the overall sector with the space being the only one in the red as we have one week left in the first half. Are they about to turn around? Of course, no one knows the answer to that and the MONTHLY chart of the IHF has some appeal. Notice it is nearing its first bullish MACD crossover in more than 4 years, and is shaping out a long cup base pattern (this is a very illiquid ETF but does give a decent visual representation as to what is going on in the group). A good chunk of the group's softness is in the PRICE action of the largest holding in UNH, which makes up nearly one-quarter of the IHF and it is sporting a bearish head and shoulders pattern and a break below 475 carries a measured move to 425. If one were to venture into this arena, the daily chart below of CI looks much better to me and it is now just 7% off its most recent 52-week highs (UNH is almost double that 13% from its annual peak). Admire that much tauter trade as it swims above its 200-day SMA (something UNH can not boast of) and one has a good idea of when this trade would not work with a break below the 330 level which has been supportive since March. That same 330 level was a successful retest of a long WEEKLY cup base breakout too. And it is now taking on the look of a bull flag.

Recent Examples:

  • Biotech land often sees former leaders fall into trouble and to see them come back to life can become a very profitable situation. Below could be a good example of that with the chart of INCY and how it appeared in our 5/24 Healthcare Note. The MONTHLY chart shows a decade ago a nice move from 50-150 which ended not surprisingly with a gravestone doji candle in March of 2017. Notice now however how important the round 60 number has been on that chart since 2016. Being supportive several times, and the move below last September and then a thrust back above in December and then a break back below this January, and now back above again here in June (has to CLOSE above 60 by this coming Friday) has the making of perhaps the ultimate bear trap. On its WEEKLY chart notice the 50 WEEK SMA curling higher for the first time since early 2023, the double bottom at the very round 50 number, and the accumulation during this 6-week win streak. On its updated daily chart it has carved out a bull flag and broke marginally above the 63 pivot Friday with a spinning top but I think this trades toward the round 70 number sometime in July.

Special Situations:

PTC Therapeutics:

  • Biopharma play up 33% YTD and down 15% over last one year period.
  • Name 14% off most recent 52-week highs and MONTHLY chart looking for 8th gain in last 9 depending on Fridays CLOSE. Second straight month touching 50 MONTH SMA and key now is to stay in close proximity to it. If July can CLOSE above big double bottom base comes into focus.
  • Earnings reactions mixed up 12.1 and 13.3% on 4/26 and 3/1 after losses of 22.7 and 4% on 10/27 and 8/4/23.
  • Enter after successful bull flag breakout retest.
  • Entry PTCT here.  Stop 32.75.

Moderna:

  • Biotech play up 34% YTD and 10% over last one year period.
  • Name 22% off most recent 52-week highs and MONTHLY chart shows some angst at rising 50 MONTH SMA but nice double bottom base setting up for later in 2024. Notice how bullish morning star completed last December also successfully retested bull flag breakout at 75 from November 2020.
  • Back-to-back positive double-digit earnings reactions up 12.7 and 13.5% on 5/2 and 2/22 and fell 6.5 and .2% on 11/2 and 8/3/23.
  • Enter on first touch of rising 50-day SMA following recent breakout.
  • Entry MRNA here.  Stop 120.

Novo Nordisk:

  • European pharma play up 37% YTD and 77% over last one year period. Dividend yield of 1%.
  • Name 2% off most recent 52-week highs and WEEKLY chart shows back-to-back doji candles which often indicate exhaustion but PRICE action trumps those if it can break above very bullish 3-week tight formation with last 3 weeks all CLOSING within just .92 of each other. Breaks above that type of consolidation are often very powerful.
  • Earnings reactions mixed up 5.2 and 3.3% on 1/31 and 11/2/23 and fell 4 and 2.9% on 5/2 and 8/10/23.
  • Enter with buy stop above bull flag.
  • Entry NVO 143.75.  Stop 137.

Good luck.

Entry summaries:

Buy after successful bull flag breakout retest PTCT here.  Stop 32.75.

Buy first touch of rising 50-day SMA following recent breakout MRNA here.  Stop 120.

Buy stop above bull flag NVO 143.75.  Stop 137.

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MONTHLY Consequence:

  • The biotech group inside healthcare has been a widowmaker for many. Each time it seems to get going it records some kind of letdown. Could the prospects be brightening? Looking at the MONTHLY chart below, next Friday becomes very important to witness if the XBI can CLOSE above the very round 90 number. Throughout 2022-23 it was above in February-April 2022, August 2022, January, June, and December 2023, and again this January but none of them CLOSED above 90. Consider this area a line in the sand. If by Friday of this coming week, the XBI can CLOSE above 90 it would make April and May a potential bear trap. The WEEKLY chart has some appeal as well with the bullish hammer candle and notice the first WEEKLY CLOSE above the middle line in the Bollinger Band since the big move last November (bullish ADX crossover from late April is still intact too). Peering at the daily chart the fund feels like it is undergoing a magnetic pullback toward the very round par number, an area where it failed miserably in late February and early March. It reset with a couple of spinning top candles at the 200-day SMA in late April and may just be rounding out the right side of a cup base.

Provider Peek:

  • The healthcare providers have been weighing a bit on the overall sector with the space being the only one in the red as we have one week left in the first half. Are they about to turn around? Of course, no one knows the answer to that and the MONTHLY chart of the IHF has some appeal. Notice it is nearing its first bullish MACD crossover in more than 4 years, and is shaping out a long cup base pattern (this is a very illiquid ETF but does give a decent visual representation as to what is going on in the group). A good chunk of the group's softness is in the PRICE action of the largest holding in UNH, which makes up nearly one-quarter of the IHF and it is sporting a bearish head and shoulders pattern and a break below 475 carries a measured move to 425. If one were to venture into this arena, the daily chart below of CI looks much better to me and it is now just 7% off its most recent 52-week highs (UNH is almost double that 13% from its annual peak). Admire that much tauter trade as it swims above its 200-day SMA (something UNH can not boast of) and one has a good idea of when this trade would not work with a break below the 330 level which has been supportive since March. That same 330 level was a successful retest of a long WEEKLY cup base breakout too. And it is now taking on the look of a bull flag.

Recent Examples:

  • Biotech land often sees former leaders fall into trouble and to see them come back to life can become a very profitable situation. Below could be a good example of that with the chart of INCY and how it appeared in our 5/24 Healthcare Note. The MONTHLY chart shows a decade ago a nice move from 50-150 which ended not surprisingly with a gravestone doji candle in March of 2017. Notice now however how important the round 60 number has been on that chart since 2016. Being supportive several times, and the move below last September and then a thrust back above in December and then a break back below this January, and now back above again here in June (has to CLOSE above 60 by this coming Friday) has the making of perhaps the ultimate bear trap. On its WEEKLY chart notice the 50 WEEK SMA curling higher for the first time since early 2023, the double bottom at the very round 50 number, and the accumulation during this 6-week win streak. On its updated daily chart it has carved out a bull flag and broke marginally above the 63 pivot Friday with a spinning top but I think this trades toward the round 70 number sometime in July.

Special Situations:

PTC Therapeutics:

  • Biopharma play up 33% YTD and down 15% over last one year period.
  • Name 14% off most recent 52-week highs and MONTHLY chart looking for 8th gain in last 9 depending on Fridays CLOSE. Second straight month touching 50 MONTH SMA and key now is to stay in close proximity to it. If July can CLOSE above big double bottom base comes into focus.
  • Earnings reactions mixed up 12.1 and 13.3% on 4/26 and 3/1 after losses of 22.7 and 4% on 10/27 and 8/4/23.
  • Enter after successful bull flag breakout retest.
  • Entry PTCT here.  Stop 32.75.

Moderna:

  • Biotech play up 34% YTD and 10% over last one year period.
  • Name 22% off most recent 52-week highs and MONTHLY chart shows some angst at rising 50 MONTH SMA but nice double bottom base setting up for later in 2024. Notice how bullish morning star completed last December also successfully retested bull flag breakout at 75 from November 2020.
  • Back-to-back positive double-digit earnings reactions up 12.7 and 13.5% on 5/2 and 2/22 and fell 6.5 and .2% on 11/2 and 8/3/23.
  • Enter on first touch of rising 50-day SMA following recent breakout.
  • Entry MRNA here.  Stop 120.

Novo Nordisk:

  • European pharma play up 37% YTD and 77% over last one year period. Dividend yield of 1%.
  • Name 2% off most recent 52-week highs and WEEKLY chart shows back-to-back doji candles which often indicate exhaustion but PRICE action trumps those if it can break above very bullish 3-week tight formation with last 3 weeks all CLOSING within just .92 of each other. Breaks above that type of consolidation are often very powerful.
  • Earnings reactions mixed up 5.2 and 3.3% on 1/31 and 11/2/23 and fell 4 and 2.9% on 5/2 and 8/10/23.
  • Enter with buy stop above bull flag.
  • Entry NVO 143.75.  Stop 137.

Good luck.

Entry summaries:

Buy after successful bull flag breakout retest PTCT here.  Stop 32.75.

Buy first touch of rising 50-day SMA following recent breakout MRNA here.  Stop 120.

Buy stop above bull flag NVO 143.75.  Stop 137.