XBI “also sits comfortably above its short term and long moving averages(see chart). Since the middle of October it has been on a meteoric rise, confirmed by its MACD crossing above signal. It is nearing near term over-bought levels as exhibited by its RSI. The short term trend line should provide resistance just near 170. This is also in the area of the 52 week high and should provide formidable resistance,” said Chojnacki.
XBI still possesses a long-standing advantage that has previously and could again prove to be a strong fundamental catalyst for the fund. A weighted average market value of $9.3 billion underscores the fact that this ETF is not overly dependent on biotech’s “big four” — Celgene (NasdaqGS: CELG), Amgen (NasdaqGS: AMGN), Gilead Sciences (NasdaqGS: GILD) and Biogen Idec (NasdaqGS: BIIB) – as primary drivers of returns.
Rather, XBI’s exposure to smaller biotech names gives the ETF leverage to the industry’s new drug approval and takeover cycles. Those factors have already lifted XBI on multiple occasions in 2014. [Puma Pumps up Biotech ETFs]
SPDR S&P Biotech ETF
Chart Courtesy: Dave Chojnacki, Street One Financial