Conclusion, Investment Implications, Strategy

The SPDR S&P Biotech ETF (XBI) is rising above two major trend proxies amid relative outperformance versus the S&P 500 and monthly asset expansion.  These conditions indicate favorable conditions for a continuation of XBI’s recent outright strength and relative outperformance.

Current Sector & Industry Group Ideas

Table 1 below is also accessible via the Sector & Industry Group Ideas rectangle at the top of the Research Center.

Table 1

Click the table to  make it larger

This table also regularly appears in our weekly Keys To This Week: Sector & Industry Groups report published on Monday mornings.

Analysis and Rationale

Chart 1 below plots the SPDR S&P Biotech ETF (XBI) weekly since mid-2020 with its 52-week moving average, a widely-watched trend proxy.  The green highlights show that XBI has recently risen above its red February 2021 major downtrend line and appears to be in the process of also rising above its orange 52-week moving average, suggesting an emerging long-term bullish trend change.

Chart 1

The upper panel of Chart 2 below plots XBI daily since January with its 200-day moving average, another widely-watched major trend proxy.  The blue line in the lower panel plots the daily relative performance of XBI versus the S&P 500 (SPY) along with its green 63-day moving average, which we use to identify the quarterly trend of relative performance.  The green highlights show that XBI appears to be in the midst of a major bullish trend change by moving above its 200-day moving average, while the lower panel shows that XBI has been outperforming SPY on a Strategic, quarterly basis since Nov 30th. 

In addition, not shown is that the total net assets invested in XBI have been in a Tactical, monthly trend of expansion since Oct 31st.  Expanding assets indicate bullish conviction in the price of the asset and fuel price advances.

Chart 2

Collectively, these charts suggest a long/overweight opportunity in Biotech, which is a subset of the Health Care Sector.