Depends who you ask.
If you’re talking to your in-laws, where their “research” consists of the Dow Jones quote at the end of the evening news, they think everything is fine.
But if you find a money manager who has been using leverage to get long tech, biotech, and all the stocks that worked in 2013, you’ll probably have to talk him off a ledge.
Biotech is one of those “leading” sectors that was hard hit during the March/April pullback. And we now have a level that if broken, will make this market a lot more healthy than what it currently is.
Depending on the way you tilt your head, IBB (the Nasdaq Biotech Index) is forming an inverse head and shoulders bottom, or potentially an ascending triangle.
The most important thing here is the resistance level that has held for the past month, right at 235.
If that level is breached and we start to see upside aggression again, it indicates a resurgence of risk appetite.
Biotech was one of the areas that led this market to the downside. If 235 clears with gusto, you can make a much better bull case for the market.
RELATED READING
Spring TraderPlanet Journal:
Learn about the “Madness of Crowds” and the pattern that showed up in biotech stocks earlier this year.
