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Biotech has been dead for years, but the Nasdaq Biotech ETF (AMEX: IBB) may be in the early stages of a major run.
Chart Courtesy of StockCharts.com
As oil tumbles money's got to move somewhere. And as these things go, the unusual is what's to be expected. So, as we snooped through our charts, we noticed the action in IBB, a former wallflower ETF.
The pharmaceutical sector has been decimated over the last several years, as Medicare reimbursement for expensive treatments has been cut back, and drug company pipelines have been all but dead.
Thus, the lifeline of big money for biotech, the blockbuster drug, has been dealt a series of major blows, and the biotech and large pharma sectors, which were once different, but have now become one big blur, had been discarded.
But after a few rounds of belt tightening and a few strategic deals in which some big firms became involved with generics things may be looking up. At least the money flows seem to have improved.
IBB, for its own right, has crossed above its 200-day moving average and seems to be on a path toward the 88 area, where there is some long term resistance to overcome. A move above 88, though could take things considerably higher over the next few months, especially if the overall stock market improves.
Lots of ifs to consider, for sure. Yet, as beaten up as the sector seems to be, a nice move would not be a big surprise just because value players might have found a place to put longer term money to work.
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