Trump takes biotech to the woodshed

Technical Analysis

Author: Greg Michalowski | biotech

He has hurt defense contractors, tech, autos....today was the biotech's turn

The biotech ETF (IBB) took it on the chin today after the President elect took the industry to the woodshed for it's whipping. Trump has gotten on the case of defense contractors, tech like Apple, the auto industry. Today, a warning shot was shot across the bow of the biotech and healthcare industry as a whole. The stocks reacted accordingly.


Technically, looking at the daily chart of the IBB, the price has tumbled toward - and below - the 100 day MA at the 278.20 level. That is a risk level for shorts now. Stay below and the bears are more in control. 

The price has also moved below the 100 day MA at 275.46 but there is a bit of a stall (the price is waffling above and below that MA.  Should the sellers remain in control, the 50 day MA  at 273.16 becomes the next MA target to get to - and through. 

Drilling into the hourly chart, the fall has moved below the 50 hour MA at 277.94. That is not far from the 200 day MA at 278.20 which makes that area (between 277.94 and 278.20) stronger resistance on the topside now.

On the downside the 100 hour MA at 273.46 (close to the 50 day MA too) and the 200 hour MA at 271.93 are the next downside targets. Get below, and it opens the door for further declines with 261.50 a key target (lows from Dec 7 and Dec 8)


In the past, the Trump comments have hurt industries or companies initially, but there has been a bounce back. With the planned dismantling  of Obamacare and a new plan to be announced, you can be sure that there may be a little more push on the healthcare industry to get prices down.  That should favor the downside. The good news is, technically, there are some tools that can help define the risk and the bias.