Big Brother Biotechnology-How Big is Big?

March 9, 2020

Mish's Daily

By Mish Schneider

blankToday, the ETF that holds Biogen, Regeneron, Amgen, Gilead as four of the top ten in its basket, sits near the low price from two weeks ago (109.70).

I designed the Economic Modern Family with the notion of economic cyclicals and non-cyclicals.

In other words, the Family serves to measure the breadth of the economy by looking at supply, demand, retail, technology, both as the measures of consumer sentiment, regional banking and biotechnology.

Biotechnology is both a cyclical and non-cyclical sector.

In good economic times, pharma companies hire more, allocate more money to research and development plus attract a lot of speculators.

In poorer economic times, pharma companies tend to do better because folks need medication regardless.

With that said, health care costs in general will impact IBB’s performance as well.


In 2009, IBB was the first of the Economic Modern Family to bottom in price and improve in phase.

Now that the market has corrected about 20%, IBB is a sector to watch.

On the weekly chart note that today’s inverted hammer doji-remember this-touched down on the 50-week moving average or blue line.

To review -An inverted hammer doji is created when the open, low and close are all around the same price.

Often, this candlestick pattern signals the end of the down move, or that a reversal is possible.

What troubles me the most right now, is how many people continue to think that this correction has given the market fair value.

What’s fair value?

Should the oil and energy market continue to plummet, I fear we have yet to see “fair value.”

However, as unlikely as it seemed that volatility after it made an inverted doji hammer back on February 5th would climb, I will not overrule that IBB’s similar formation does not mean that this too can climb.

One fundamental aspect to IBB to consider is its role in finding a vaccine for the coronavirus.

At least for now we have a clear level to watch-109.70 with fudge.

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S&P 500 (SPY) 285.54 the low from 2 weeks ago resistance. 273 closest support.

Russell 2000 (IWM) 140.00 resistance with 130 support then 127.75

Dow (DIA) 247 overhead resistance 236.00 the 200-WMA support

Nasdaq (QQQ) 199.27 the 200-DMA pivotal 185 underlying support

KRE (Regional Banks) Ouch. 35 support. 44 overhead resistance

SMH (Semiconductors) 125.00 now resistance. 112.50 support

IYT (Transportation) 155.24 the resistance or 2018 low. 143 then 139 support

IBB (Biotechnology) 109.70 to hold. 113 resistance to clear

XRT (Retail) 39.16 resistance 36.00-36.90 support

Volatility Index (VXX) 43 resistance 35 support

Junk Bonds (JNK) 98.76 2018 low

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