The Week That Was

Last week the SPX, Dow and the Nazzy made more all tie highs.  The Russell 2000 didn’t, but the chart remains very bullish and it looks like it wants to join the party, maybe as soon as this week.
The Nasdaq had a phenomenal breakout on Friday (+2.9%) thanks to GOOG, AMZN and AAPL.
Retail looks pathetic and I think it probably goes lower and I expect retail earnings to suck this quarter. Everyone is getting Amazon’d lately and if you look at a weekly chart of XRT you can see that there is a long, long way down.
This sector could be one of the best shorts over the next year or two and there are some fabulous setups that look like 50% return candidates to the downside.
Biotech had a bad week. It’s Interesting that XBI was down about 2% but IBB was down about 4% last week. You don’t see this discrepancy a lot, but there’s a reason  for it.
IBB has significant exposure to CELG  which got hammered.Other heavily weighted IBB stocks that had a bad week were GILD and BIIB.
The big cap biotechs are having problems now, but I’m seeing really good action in some of the smaller cap names.  Stocks like PBYI, BLUE, FGEN had positive weeks.
Its very possible that we will start to see a rotation within this sector from the big caps to the small and mid caps names.
The one positive takeaway last week was that XBI held that uptrend line (green arrow) and bounced.  This could be a sign of a short-term bottom.
It’s not that biotech didn’t deserve some pain. Heading into October, the SPDR S&P Biotech ETF had gained 47% this year, more than three times the S&P 500’s 14% during the same period.
October is historically the second-worst month for the SPDR S&P Biotech ETF relative to the S&P 500.  Data show that biotech bounces back in November. At the same time, the 14-day relative strength indicator—a technical indicator that shows whether a stock or ETF is overbought or oversold—fell to a level on Thursday that suggests a bounce could be imminent. I’m still bullish as we come down the home stretch of 2017.
See you in the morning.
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