About 3 weeks ago I wrote an article for Trader Planet entitled: Bye Bye Biotech, with an immediate target for the main Biotech ETF (IBB) of $250 and a 12-18 month target of $175 and then $150.
This week IBB hit my first target (the low was $251) and has paused at its Volume Profile Point of Control (VPPOC) at $260. Interestingly the Nasdaq itself is also at its VPPOC (750 day lookback). This is probably not a coincidence, since much of the Nasdaq’s bull market momentum was generated by biotech.
Although the biotech ETF has a market cap of only $7 billion, the market cap of its top 10 holdings, which represent 60% of total assets, is $500 billion.
It would be nearly impossible for the Nasdaq to decline from here without biotech weakness. The severe chop in the Nasdaq futures yesterday was presumably caused by selling the FANG stocks and the simultaneous covering of shorts in Biotech. That’s a serious cross current.
I’m looking for a nice bounce in IBB… starting today.
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