The biotech exploded to the upside this week with the Nasdaq Biotech ETF (IBB) up 8% at the close.  In the video below I review IBB as well as its three top holdings: Gilead Sciences (GILD), Biogen (BIIB) and Celgene (CELG).  

Nasdaq Biotech ETF

The Nasdaq Biotech ETF (IBB) rose 8% this week in a huge move.  In a previous video I drew two trendlines on the weekly chart showing a rising wedge. Now this move has burst above the upper trendline. so this is either a breakout or a “throw-over” that will soon fail.  

We will only know with the follow-thru price action that we get. $330 was resistance that was broken this week. Next resistance level will be around $343. But the daily chart is very extended, well outside the Keltner Channel. The move looks very similar to the late June move that also got outside the Keltner Channel.

Gilead Sciences

Gilead Sciences (GILD) exploded 13.5% this week as the best performer of the three stocks I am discussing today. In full disclosure I did have my Insider Members in an option trade on GILD. We entered on August 23rd and exited on Wednesday August 30th. The trade generated a 300% profit in 5 trading days.  That is what happens when you are positioned and the stock explodes.

So back to the charts. I first look at the weekly charts on GILD. It has been in an upward trending channel for 20 years. It broke the lower end of that channel in March of this year. It has now popped back into it.  The daily chart is more interesting so I am going to focus on that. The up move started last week and the explosion occurred on Wednesday.

On Wednesday the first resistance level was shattered at $77 and then the next resistance level at $80 was also broken. Volume that day was nearly 36 million shares. The highest number of shares on an up day since November 12, 2012…almost 5 years. I pegged the next resistance at 81.57 but that too was broken the next day. The high for the week was $84.13 hit on Thursday and it closed the week at $83.75. 

The high for the week is almost exactly at the bottom of a gap that occurred on July 26, 2016.  A gap close will occur at $86.27 on the daily chart with more resistance right above at $88. GILD is well outside the upper end of the Keltner Channel. A move back inside the Keltner Channel may indicate it’s time for a pullback and/or consolidation.

Biogen 

Biogen (BIIB) was the next biggest mover of these three biotech stocks, gaining 12.6% this week. Its weekly chart clearly shows the break above the $300 level that was providing resistance for the last year. The weekly chart shows the next resistance zone to be at the $350-360 level.

The daily chart shows that it too is very extended, well outside the upper band of the Keltner Channel. When you look back you see a large gap that occurred on July 24, 2015.  The gap exists between $301.21 – 354.16.  Part of this gap was closed the very next month but BIIB never got higher than $311.80 in the last 2 years…until Wednesday. I can see BIIB pushing to close that gap at $354 but it may be due for a rest first.

Celgene

Celgene (CELG) is the 3rd largest IBB holding.  It was up 7.5% this week.  Its weekly chart shows that it challenged the intra-week high of $140.72 that occurred the week ending July 24, 2015. This week CELG closed at $139.38 for a new all-time closing high on a weekly and daily basis. 

CELG is also above the Keltner Channel as the others are, but it is not quite as extended. The test will be this $140 level.  Recent resistance on the daily chart was at $139 which repelled prices in July.  The positive is that Friday’s close was slightly above that level.

If you haven’t watched the video yet, click on the image above and watch it.  I walk thru all the charts in the video.