We’ve had our eyes on Biotech lately! $XBI – December 22, 2022

by DAN XBI CPRX VRNA 
This is Scott with your Chart of the Day. I want to point out a sector that we have been talking about at StockMarketMentor.com for a while, and that is Biotech ( NYSEARCA: XBI ). As you know Biotech ( NYSEARCA: XBI ), for the most part, is not impacted by raising interest rates.

We’ve seen some really nice names in Biotech ( NYSEARCA: XBI ) take off, ones that we have been trading at Stock Market Mentor, like CPRX ( NASDAQ: CPRX ). This one had a really nice move just above that 50-day moving average.

We also had VRNA (NASDAQ: VRNA ), which is a stock that was on Dan’s Active Trade List, this was huge. It was almost 70 percent off of these moving averages, even if you only got half of that, that is still a pretty good move. Biotech ( NYSEARCA: XBI ) has been a sector that we have been watching.

Today, near the close, I did take a small starter position in Biotech ( NYSEARCA: XBI ) and I will tell you why. Because as you can see for the last couple of months here XBI ( NYSEARCA: XBI ) has been just kind of consolidating around these moving averages. It’s been chopping up and down but we are getting progressively higher lows. And we are also getting progressively lower highs.

You can see this tightening pattern, and the fact that we are right near these moving averages gives you a natural floor to define your risk off of. And so a few of us took some small positions in XBI ( NYSEARCA: XBI ) and we are looking for this, and I will probably add to my position if it does do that.

But if it does do this, that’s okay. I will get stopped out and I will get stopped out small because I am just kind of having a feeler position now, waiting for this to really break out and show me which direction it’s going to go in.

In this market, I’ve had much better luck starting a position close to the major moving averages and then adding on the position. As opposed to buying the breakout and then ultimately getting shaken out. A quick chart here. I hope that is helpful.

Free Chart