The iShares Nasdaq Biotechnology ETF (IBB) and First Trust NYSE Arca Biotechnology Index Fund (FBT) are two biotech ETFs with exposure to Biogen Inc. (BIIB) , a stock that is soaring this morning as noted in my own technical analysis of the name. Let's take a quick look at the charts of these two ETFs to see how they might respond to the big rally in BIIB today.
In this daily bar chart of IBB, below, we can see a year-long sideways trading range for IBB. Buyers appeared in the $102-$100 area and rallies above $114 ran out of steam. Within the trading range market prices crossed above and below both the 50-day moving average line and the 200-day line. Recently IBB moved above the rising 50-day moving average line and above the flattish 200-day line. Despite the sideways trading range, the daily On-Balance-Volume (OBV) line shows a positive trend the past 12 months. The Moving Average Convergence Divergence (MACD) oscillator moved above the zero line in May for an outright go-long signal and is poised for another buy signal.
In this Point and Figure chart of IBB, below, we can see a significant consolidation pattern from July 2017 (look for the "7" on the chart in 2017). A potential price target of $138.56 is being projected and a trade at $114.23 will help.
Bottom line: Go long IBB above $114 and risk below $108 looking for gains to $120 and then the $140 area in the months ahead.
In this daily bar chart of FBT, below, we can see an uptrend from last July to January. Since January the price of FBT has moved sideways, with selling in the $145-$150 area the past six months. Prices are currently above the rising 50-day moving average line as well as the bullish 200-day line. The daily OBV line has paralleled the price movement. The MACD oscillator moved above the zero line in May and is poised for a fresh buy signal.
In this Point and Figure chart of FBT, below, we can see a $124-$146 consolidation pattern with a $164.39 price target.
Bottom line: Traders could go long FBT at current levels and on strength above $147, looking for gains to the $165-plus area. Risk a close below $140 for now.