Conclusion, Investment Implications, Strategy
The SPDR S&P Biotech ETF (XBI) is amid favorable conditions to resume its November 2019 advance. A sustained rise above this week’s lows would help confirm this and target an additional 29% rise to $118.50 area. This is an Asbury Momentum idea.
Analysis and Rationale
SPDR S&P Biotech ETF (XBI) seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the S&P Biotechnology Select Industry Index derived from the biotechnology segment of a U.S. total market composite index. In seeking to track the performance of the S&P Biotechnology Select Industry Index (the “index”), the fund employs a sampling strategy. It generally invests substantially all, but at least 80%, of its total assets in the securities comprising the index. The index represents the biotechnology segment of the S&P Total Market Index (“S&P TMI”).
Chart 1 below plots XBI weekly since mid 2016. The green highlights show that, following an initial late November breakout higher from 18 months of sideways investor indecision, XBI has recently corrected lower. Our tactical market tools now indicate favorable conditions for that initial November rise to resume. A sustained rise from this week’s lows would help confirm this and target an eventual, additional 29% rise to 118.50.
Chart 1
Table 1 below shows that, considering the aforementioned upside target and a protective stop placed below the 88.57 area, a long entry price of 92.00 would provide a 1:7.7 risk/reward ratio (risking $1.00 to make $7.70) with an initial risk of 3.7%.
Table 1
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Please consult the table showing our Asbury 6 key market metrics to help determine if this investment is suitable for you.