May 5, 2020
By Mish Schneider
If there is one area to watch should the market have another run up, it is Biotechnology IBB.
The channel lines that are perfectly parallel, go back to 2015.
Since this is a weekly chart, what matters most is the weekly close.
That means that intraweek, we can consider price movements, but cannot consider a legitimate channel break up or down until the closing price on Friday.
Fundamentally, IBB is strong as a lot of the hope that the economy returns to normal depends on pharma to create a vaccine, and drugs to help with symptoms.
Also interesting is that IBB made its all time highs in 2015 and has not traded up to that price since.
A weekly close over 128 area would be a good reason to believe new highs are imminent.
In the middle of the channel, I would expect a lot of chop.
Note the moving averages at 111.14 and 106.12-good midpoints to remember.
And although far away, a close below 92 would not be good at all!
Russell 2000 (IWM) 126 support to hold and over 130 better
Dow (DIA) Since could not close over 240 looks vulnerable
Nasdaq (QQQ) Failed at least week’s highs needs to hold around 215
KRE (Regional Banks) 35 must hold or do not think market will hold
SMH (Semiconductors) 128-131.75 range near-term range
IYT (Transportation) 143.64 has to clear. 140 support.
IBB (Biotechnology) 128 has to clear
XRT (Retail) 35.00 support 37.50 resistance
Volatility Index (VXX) 40.00 pivotal
Junk Bonds (JNK) 97.70 resistance 96.25 support
LQD (iShs iBoxx High yield Bonds) 127.20 support
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