Bollinger Bands Telling the Story?
Biotech has been a subsector within healthcare where losers tend to congregate. The space is not called the “widowmaker” for nothing. False pushes higher have occurred which inspire hope, but salty veterans know this is far from a viable strategy. Sure it will have its moments where bulls get excited but the sanguine feeling is often transitory. The daily chart of the XBI displays the troublesome theme as the fund was above the middle line in the Bollinger Band for just one session before undercutting Tuesday (by mere pennies). Is this bearish stance becoming too predictable? The bearish engulfing candle today suggests there could be some more pain into the lower Bollinger Band line near 85.30 before the next temporary jump occurs. Investors playing this space should be quick to take profits on any quick rallies, and any longs will be subject to the weight of the overall group’s heaviness. Doji candles were recorded on 3/10 and 3/20 which suggest the ETF may be bottoming but market participants in this arena have been trained to not trust any fledging bottoms. I have always stated one must be open-minded to all possibilities within and select individual names have flourished inside. But take a balanced approach and remain underweight the group until PRICE demands your bullish slant. Bollinger Bands tightening are telling you to be ready for a big move either way. Recency bias tells us the move is likely lower.