Biotech Funds Stuck in Neutral at Quarter’s End

Biotechnology stocks roared higher into early September, lifting major sector funds to their highest highs since 2015, but the rally has fizzled out in recent weeks, failing to reward late-to-the-party shareholders. The lack of buying interest into the quarter’s end is especially troubling because these accounting periods often generate window dressing events, in which fund managers scoop up the top performers of the prior three months.

The pullbacks have been orderly so far, signaling profit taking rather than a sentiment change that undermines further upside. However, weak action is taking its toll, dropping weekly relative strength indicators into sell cycles that predict another six to ten weeks of laggard behavior. As a result, sidelined players should keep their powder dry, waiting for signs of legitimate buying pressure or downside into deep support levels that offer more favorable reward-to-risk profiles. (For a quick refresher, check out: The Industry Handbook: Biotechnology.)

Biotech funds topped out on the first day of September, denying fresh profits to trend-following shareholders. …read more

Read more here: Biotech Funds Stuck in Neutral at Quarter’s End

Category: IBB, XBI

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