Chart Courtesy: Kimble Charting Solutions
IBB’s recent weakness has dragged the ETF below its 20- and 50-day moving averages, though the ETF currently resides more than 13% above its 200-day line.
What makes IBB’s current test of the support highlighted by Kimble so important is that, for several years now, nearly every dip and test of an important support area by IBB and rival biotech ETFs has been bought by investors, helping make biotech ETFs juggernauts. [Behind the Stellar Run for Healthcare ETFs
Dating back to 2012, at least two biotech ETFs per year have ranked among the 10 best sector ETFs, but those ETFs have struggled lately despite some bullish earnings reports. For example, shares of Amgen (NasdaqGS: AMGN) are down almost 6% over the past week, a time frame that includes the company saying first-quarter EPS surged 50%. Amgen also boosted its 2015 guidance.
Shares of Biogen (NasdaqGS: BIIB) have plunged 8% over the past week with losses accelerating after the company said first-quarter profits jumped 71%. IBB has a combined weight of 15.8% to Amgen and Biogen. [A Tough Spot for Biotech ETFs]