Since 2009 bottom or over the last 6 years Biotech ETF (IBB) has been one of the best performing financial instruments out there. Up +310% Vs the Dow +177%. The question is…..
Will this outperformance continue or are you better off shorting the index?
I would be the first to admit that the long-term technical picture for IBB remains incredibly bullish. Despite its fundamental overvaluation and high-risk investment opportunities typically associated with this ETF. With that in mind, at least the short-term picture is starting to deteriorate, demanding our further attention.
For instance, the spike lower into February 4th low suggests that the index might be ready to go lower. Not that it will, that it might. Here is the bottom line. Whether you are long the index or thinking about going short, pay particularly close attention to IBB over the next 2-8 weeks. Should this ETF break below February lows, we might see a very quickly re-test of October lows (20% decline). And that wouldn’t be a bad short-term move on the short side. So, pay close attention.
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