Recently, we spotted the potential of a breakdown in biotechnology stocks, see Biotechnology Stocks Have News For Investors: It is Now or Never . We warned readers to be on the safe side, as a breakdown scenario would be significant.
What we see happening right now is biotech creating a trading range. In other words, biotech is consolidating and forming a bottom. Sectors, stocks, assets, can do only 3 things: trend higher, trend lower, move sideways. The latter is the path that biotech has chosen.
Biotech is has tested several time long term support as indicated with the red bar on the chart below. So far, it has not given away. We start seeing a series of higher lows which suggests biotech could be willing to go higher in the first months of 2017. Watch the 280 to 300 level very closely.
The market is clearly not bullish yet, but will become very bullish once above 300 for at least two weeks.