The Biotech ETFs IBB and XBI have had some awesome runs over the last couple of weeks, but are in the midst of notable technical headwinds.

Looking at the daily charts, they have broadening trading patterns at the worst times.


The longer term IBB chart has formed a rising wedge off the 2016 lows.  This is a corrective pattern.  We’re looking for impulsive patterns.  The only impulse we’ve seen was an excitable rip the week before labor day.

ibb w

The longer term XBI chart is broadening out here around the old highs.

xbi wk

There are a handful of good looking biotech setups but these technical structures suggest this isn’t a group we want to bet the farm on.  We want select exposure at best.

Markets give us endless ideas and opportunities.   As traders we only need to pick 2-3-4 at any given time.  What we’re seeing here makes it tough for a biotech stock to make the cut of our best 2-3-4 ideas.

Trade ’em well.