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Vitalii Liubimov's Avatar
published in Blogs
Sep 20, 2019

Three different biotech ETFs, three bearish signals with high confidence

The biotech sector has been trending lower for the last five months, but has seen a bit of a rally over the last few weeks as investors appear to be making a shift from growth stocks to value stocks. Because of this rotation, many stocks in the sector are in overbought territory, at least on the daily charts. When I ran my nightly scans on Thursday night, I found three different biotech ETFs on my bearish scan and then I found that all three had seen bearish signals generated by the Tickeron Trend Prediction Engine.

The iShares Nasdaq Biotechnology ETF (Nasdaq: IBB), the Direxion Daily S&P Biotech Bull 3x Shares (AMEX: LABU), and the SPDR S&P Biotech ETF (NYSE: XBI) are the three ETFs appearing on my bearish list.

Let’s look at each one individually. The IBB has been trending lower since early April and a downward sloped trend channel has formed in the last five months. The fund just hit the upper rail of the channel and that upper rail is in the same vicinity as the 50-day moving average.

The daily stochastic readings are in overbought territory and made a bearish crossover on September 19. The bearish signal from the Tickeron Trend Prediction Engine came on September 17. The signal shows a confidence level of 71% and it shows that 85% of past predictions on the IBB have been successful. The signal calls for a decline of at least 4% within the next month.

In addition to bearish signal from Tickeron, the technical analysis overview shows that the price moved below its 50-day Moving Average, which indicates a reversal from an uptrend to a downtrend. In 35 of 40 cases where IBB's price crossed below its 50-day Moving Average, its price fell further within the subsequent month. The odds of a continued downtrend are 88%.

Turning our attention to the leveraged LABU fund, we see that it peaked around the same time as the IBB. There trend line connecting the highs is cleaner than the upper rail of the channel on the IBB, but there isn’t a parallel lower rail that would form a channel.

Like we saw on the IBB chart, the daily stochastic readings for LABU are in overbought territory and made a bearish crossover on September 19. The Tickeron Trend Prediction Engine generated a bearish signal on September 17 as well. The signal for this ETF showed a confidence level of 80% while past predictions have been successful 97% of the time.

Additionally, the Tickeron Technical Analysis Overview shows that the higher Bollinger Band was broken. A price fall is expected as the ticker heads toward the middle band. In 37 of 38 cases where LABU's price broke its higher Bollinger Band, its price dropped further during the following month. The odds of a continued downtrend are 90%.

Finally, the chart for the XBI looks a little different from the other two ETFs. Yes, the fund peaked in April, but it has seen a trend channel form over the last three months and it just hit the upper rail of the channel this week. Like the IBB channel, the upper rail of the XBI channel is in close proximity to the 50-day moving average.

As we saw with the other two, the stochastic readings are in overbought territory and made a bearish crossover, and we have the bearish signal from Tickeron on September 17. The signal for the XBI showed a confidence level of 75% and past predictions were successful 90% of the time.

For the XBI, there were several other bearish factors on the technical analysis overview. First, the fund moved above its higher Bollinger Band on September 11, 2019. This price move signals that XBI may fall back below the higher band and head toward the middle band. In 39 of 43 cases where XBI's price broke its higher Bollinger Band, its price dropped further during the following month. The odds of a continued downtrend are 90%.

On September 12, the 50-day moving average crossed below its 200-day moving average and that indicates a sell signal, due to the trend repositioning lower. In 3 of 3 cases where XBI's 50-day moving average crossed below its 200-day moving average, its price fell further within the subsequent month. The odds of a continued downtrend are 90%.

And like we saw on the IBB, the XBI saw its price drop below the 50-day moving average, which indicates a reversal from an uptrend to a downtrend. In 36 of 42 cases where XBI's price crossed below its 50-day moving average, its price fell further within the subsequent month. The odds of a continued downtrend are 86%.

Related Ticker: IBB

Momentum Indicator for IBB turns positive, indicating new upward trend

IBB saw its Momentum Indicator move above the 0 level on April 21, 2025. This is an indication that the stock could be shifting in to a new upward move. Traders may want to consider buying the stock or buying call options. Tickeron's A.I.dvisor looked at 93 similar instances where the indicator turned positive. In of the 93 cases, the stock moved higher in the following days. The odds of a move higher are at .

Price Prediction Chart

Technical Analysis (Indicators)

Bullish Trend Analysis

The RSI Oscillator points to a transition from a downward trend to an upward trend -- in cases where IBB's RSI Oscillator exited the oversold zone, of 24 resulted in an increase in price. Tickeron's analysis proposes that the odds of a continued upward trend are .

The Moving Average Convergence Divergence (MACD) for IBB just turned positive on April 17, 2025. Looking at past instances where IBB's MACD turned positive, the stock continued to rise in of 48 cases over the following month. The odds of a continued upward trend are .

Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where IBB advanced for three days, in of 335 cases, the price rose further within the following month. The odds of a continued upward trend are .

IBB may jump back above the lower band and head toward the middle band. Traders may consider buying the stock or exploring call options.

Bearish Trend Analysis

The Stochastic Oscillator has been in the overbought zone for 2 days. Expect a price pull-back in the near future.

Following a 3-day decline, the stock is projected to fall further. Considering past instances where IBB declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .

The Aroon Indicator for IBB entered a downward trend on April 21, 2025. This could indicate a strong downward move is ahead for the stock. Traders may want to consider selling the stock or buying put options.

Notable companies

The most notable companies in this group are Amgen (NASDAQ:AMGN), Gilead Sciences (NASDAQ:GILD), Regeneron Pharmaceuticals (NASDAQ:REGN), IQVIA Holdings (NYSE:IQV), Biogen (NASDAQ:BIIB), Illumina (NASDAQ:ILMN), Incyte Corp (NASDAQ:INCY), Moderna (NASDAQ:MRNA), Exelixis (NASDAQ:EXEL), Intra-Cellular Therapies (NASDAQ:ITCI).

Industry description

The investment seeks to track the investment results of the NYSE Biotechnology Index composed of U.S.-listed equities in the biotechnology sector. The fund generally will invest at least 80% of its assets in the component securities of its underlying index and may invest up to 20% of its assets in certain futures, options and swap contracts, cash and cash equivalents. It is non-diversified.

Market Cap

The average market capitalization across the iShares Biotechnology ETF ETF is 4.63B. The market cap for tickers in the group ranges from 22.57M to 151.69B. AMGN holds the highest valuation in this group at 151.69B. The lowest valued company is QTTB at 22.57M.

High and low price notable news

The average weekly price growth across all stocks in the iShares Biotechnology ETF ETF was 72%. For the same ETF, the average monthly price growth was 54%, and the average quarterly price growth was 117%. STRO experienced the highest price growth at 148%, while ALMS experienced the biggest fall at -14%.

Volume

The average weekly volume growth across all stocks in the iShares Biotechnology ETF ETF was -2%. For the same stocks of the ETF, the average monthly volume growth was -5% and the average quarterly volume growth was 4%

Fundamental Analysis Ratings

The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows

Valuation Rating: 57
P/E Growth Rating: 78
Price Growth Rating: 69
SMR Rating: 86
Profit Risk Rating: 88
Seasonality Score: -3 (-100 ... +100)
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General Information

Category Health

Profile
Fundamentals
Details
Category
Health
Address
iShares Trust400 Howard StreetSan Francisco
Phone
1-800-474-2737
Web
www.ishares.com
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