Biotech Benefits From Healthcare Rise (XBI)
If you listen or read any media source today you hear about the new healthcare bill proposed to help all Americans get quality care. Interesting how their could be so many contradictions in one sentence. Regardless, the proposed bill (which no one understands or has read for that matter) is providing an upside stimulus to the sector. Healthcare stocks have moved higher in anticipation of the $1.2 tillion additional spending from the government. IYH, iShares Healthcare ETF has moved up more than 12% since the current version was deemed to have a chance of passing. Since the public option was thrown out IHF, iShares Healthcare Providers ETF has move up 10%. No profit for the sector anticipated from this pork bill.
Biotech which has struggled of late, as investors believed this sector to be one of the worst hit by proposed changes, has started to move higher as well. The old adage of something for everyone comes to mind. XBI, SPDRs Biotech ETF below shows the trading range the sector has been in for the last year. The break yesterday above $52 from an ascending triangle was bullish technically. This could follow through and move to top of the trading range with an initial target of $56.80. With the current activity surrounding the sector it is worth watching short term as a potential opportunity.
As with any investment the key is to have a disciplined strategy. This happens to be a technical pattern breakout strategy. The entry is confirmation of the breakout, the target is the top of the trading range and the stop would be a reversal below the top of the triangle or around $51.20. Entry, Exit, and Target on any investment. These three steps implemented on every investment will help you manage the risk of your portfolio. To learn more about this process try SectorExchange.com for thirty days.
