stock market S&P 500

Biotech and Technology Stocks Rally, Is It A Breakout or Fakeout?

Biotech and Technology Stocks Rally, Is It A Breakout or Fakeout?

Biotech and Technology stocks both showed a little bit more life today, then they have in past days. Should this trend continue tomorrow, it would be a good sign for the stock market as a whole.

Mott Capital Management, Michael Kramer

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S&P 500

The stock market continues to be extremely volatile, with another day of wild price action. I think I wrote this last week, but it makes trading this market nearly impossible. I’m glad I do not trade the market, and only use a buy and hold strategy, easier to manage, and less stressful. The S&P 500 lows reached 2,700 today, by the end of the day we made a round trip and finished lower by only 1 point, go figure.  The volatility remains too dangerous to try to time anything these days. The sad part, I think it is here to stay for some time, and we should get used to it.

stock market S&P 500



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Biotech Stocks

The NASDAQ Biotech ETF (IBB) closed today just a hair above $111.50, at $111.80. For me, that is not enough to say it broke out. You need to watch tomorrow for a follow through. The group needs to continue higher and manage to rise significantly above $112. Also, I want to see this group meaningfully outperform the major averages. If we get those two pieces tomorrow, I become much more constructive on the group. But to this point, I’m not convinced.


The iShares Biotech ETF (XBI) had a much sharper rise, but again,  I want to see a meaningful follow through tomorrow.


Technology Stocks

The technology ETF (XLK) is making a move towards resistance again, and all I can say is that this time it better rise above $69.25. We do not want this group failing three times at resistance.


If these two sectors can start working, then I think I would become more constructive on the stock market. For now, I think these moves need to continue to be considered suspect. The way the stock market whips around these days, it makes it impossible to sit back and just ride a trend, because that trend can change direction very quickly.

That’s gonna be it for today. Let’s see what tomorrow brings.


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