Bio-tech facing breakout level, leader going to pull S&P higher?


When it comes to “leadership” in the stock market, Bio-Tech (IBB) has filled that role rather well over the past 5-years, in both directions!

When looking at how IBB did compared to the S&P 500 from the lows in 2011 to the highs of this summer, IBB left the S&P 500 in the dust, gaining 250% more (see top chart below).



IBB also led the S&P 500 to the down side this summer, as it fell over twice as much as the broad markets.

Below looks at the the current patterns on IBB and reflects that leadership, is facing an important test.



As mentioned above, IBB remains inside of a multi-year rising channel. The decline from this summers high, did not break channel support. In our free webinar of a month ago, we shared that several positive messages were coming from this sector and Premium Members have been long a key bio tech stock since 10/9 and are up over 15% since the purchase.

IBB has created a series of lower highs since July.  At this time, IBB is up against falling resistance line (1) above.

Bottom line…IBB remains a leader in both directions and is attempting a breakout in a bullish rising channel.

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Joe Friday Says…Bull market progress could depend on this stock



When it comes to stocks that have been hit hard of late, Valeant Pharma (VRX), sure comes to mind. VRX is declined over 70% since July.

The decline has caused momentum to reach levels not seen since the 2009 lows at (1).

Volume has skyrocketed at (2). Potential that panic selling has taken place?

VRX after the huge decline, finds itself testing a cluster of support at (3).

Joe Friday just the facts...VRX is part of the 4-year white hot Bio-tech sector. What VRX does at (3) above, will have a big impact on the leading Bio-tech sector, which should also have an impact on the broad markets!

Buffett should be concerned about Berkshire and UNP here!



Is Berkshire Hathaway (BRK-A) and Union Pacific (UNP) a good proxy for the broad markets and economy? If you happen to believe they are, what happens to both of them from here, should be very important!

BRK and UNP both hit highs before the broad market did, earlier this year. Did they lead the market lower? Time will tell. Of late while the S&P 500 has rallied back near all-time highs, neither of these stocks has been able to match the broad markets upward strength.

The decline in BRK took it below its 4-year rising channel and the decline in UNP put it back inside of its 30-year rising channel.

Now BRK is kissing the underside of the 4-year rising channel as resistance for the first time ever at (1), which now could become a very important underside kiss.

UNP is now back inside of its 30-year rising channel and is kissing the underside of this long-term channel for the first time since the early 1990’s.

Are these two stocks/companies leading indicators of things to come? Whether they are leading indicators, is not what is important to the Power of the Pattern at this time. What is important is this…both are testing the underside of multi-year resistance lines at this time.

What they do at these resistance lines, should be very important for where these companies are 6-months from now!