Biotechnology stocks look ready to pullback after rallying 11% since August 21, 2017. The key support level to watch on IBB is 329.
Notice how our favorite swing trading indicator the PPO shows falling histogram bars (red arrow). The falling PPO suggests IBB will likely retest its 329 support level within the next week. We might see a chop out to slightly higher move and then a break down through the 329 support level before the end of September.
Don’t buy the biotechnology stocks hype on mainstream financial websites like Seeking Alpha, MarketWatch, and Daily Reckoning.
I would not go long biotech stocks right now and would NOT take Tarun Chandra’s advice on SeekingAlpha here.
Also watch out for MarketWatch who awarded Greg Guenthner their “Call of the Day” because he wrote here:
Bottom line: the late-summer fade is finished. Biotech stocks are ready to finally put the finishing touches on a months-long quest to reassert the sector as a true market leader.
I like trading biotechnology stocks. Biotechs have the best catalysts of any sector and I did a stock trading lesson on finding catalysts here. What I don’t like about biotech stocks is a strategy that involves chasing them higher. Chasing high-beta biotechs is stock trading suicide IMO. Wait for the September (worst month of the year for stocks) dip that usually comes towards the end of the month before taking a long entry in biotech stocks.
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