XBI shows bullish follow-through

We have highlighted a bullish technical setup for the iShares Biotechnology ETF (IBB) in recent editions of The Sector Edge (November 17 and October 6). Similarly, the SPDR S&P Biotech ETF (XBI) has rallied out of a 2022-2025 big base. While above 105-103, this big base breakout remains intact with upside potential toward the pattern count at 143. Interim resistance levels come into play at the 50% and 61.8% retracements of the February 2021–May 2022 decline, located at 118.28 and 131.62, respectively. The 38.2% retracement and rising 13-week moving average at 104.95-103.76 reinforce the 105-103 breakout zone.

XBI has shown strength vs. the SPX from a mid May low. The sustained rally above the declining 26- and 40 week moving averages vs. the SPX has maintained confidence in this tactical leadership shift for IBB.

Chart 1: SPDR S&P Biotech ETF (XBI)