Biotech: XBI bullish relative to IBB

We received a question regarding the SPDR S&P Biotech ETF (XBI) after Friday's (12/12) post on the iShares Biotechnology ETF (IBB). Both XBI and IBB have bullish breakouts from 2022-2025 big bases that support the case for more upside, but the relative ratio chart suggests that XBI can continue to outperform IBB.

XBI is firmly bullish above a risk management support level at 118.28-117.10 (50% retracement of the February 2021 to May 2022 decline and the late November bullish weekly candle low) with upside potential to 131.62 (61.8% retracement) and 143 (big base pattern count). In addition, a decisive break above the 61.8% retracement would increase the potential for a full retracement back to the 2021 peak at 174.79.

Chart 1: SPDR S&P Biotech ETF (XBI) (top) and relative to the S&P 500 (bottom)

XBI has shown relative strength versus IBB since the XBI/IBB ratio bottomed in late 2023. The late 2025 setup resembles the late 2016 into early 2017 breakout from a bottoming pattern off the 2014 and 2016 relative lows, which suggests that XBI could continue to outperform IBB. A decisive rally above the March 2024 high on the XBI/IBB ratio chart would confirm the potential for additional leadership for XBI relative to IBB.

Chart 2: XBI relative to IBB