SIA Weekly: A Look at Trends in NASDAQ and Biotech

by SIACharts.com

In this week’s edition of the Equity Leaders Weekly, we are going to re-examine one of the major U.S. Equity indexes: the Nasdaq Composite Index, considering some recent weakness. The index continues to be one of the strongest performers around the world however things have pulled back slightly from the highs hit earlier this year. In addition to this we will look at the Nasdaq Biotechnology Index which is a sub index of Nasdaq names focused on the biotechnology space. This index, while also cooling off a little bit Tuesday has managed to outpace the Nasdaq Composite YTD.

Nasdaq Composite Index (NASD.I)

On June 27th, news that Alphabet Inc.(GOOG), the parent company of internet giant Google, would be receiving a US$2.7 billion fine from the European Union’s antitrust regulators stating that Google is skewing their search results in favor of their own shopping services. While the penalty will not hurt GOOG’s $90 billion cash on the books, the fine did spark quite the tech sell-off in Tuesday’s trading.

A Google spokesperson said that they “respectfully disagree” with the fine and will consider an appeal which, if successful, will be likely able to protect their “secret sauce” when it comes to their advertising and search algorithms. Should Google not appeal the fine this information may come under scrutiny from the EU to ensure fairness from Google to their competitors.

On Wednesday the U.S. stock market rebounded from the technology driven sell off on Tuesday with the NASD.I posting a 1.43% gain and almost recouping all of the losses from the previous session. While the Nasdaq Index and big tech stocks have been hit with some higher volatility of late, the index still only manages to sit 1.38% off its all time highs that were seen earlier this month. The index has been on fire over the last year and YTD still sitting up over 14% in 2017.

In looking at the Point and Figure chart of NASD.I we can see that the index is still in its strong uptrend column of X’s. Should this continue the next areas of resistance to focus on would be the 6500 and 7000 psychological levels. Support for NASD.I comes in at 5792 and ~5200. Still maintaining a 10 out of 10 SMAX score, NASD.I is showing near term strength versus the asset classes.

iShares Nasdaq Biotechnology Index ETF (IBB)

On the topic of Nasdaq volatility lets focus our view within the Nasdaq to the iShares Nasdaq Biotechnology Index ETF (IBB). The IBB ETF seeks to track the investment results of an index composed of approximately 160 biotechnology and pharmaceutical equities listed on the NASDAQ Exchange and makes up only about 12% of the index. The IBB index has outpaced the NASD.I on a 1 month (IBB: 7.93% vs NASD.I: -1.02%), 3 months (IBB: 6.11% vs. NASD.I: 5.24%) and YTD time period (IBB: 17.34% vs. NASD.I: 14.18%) and the trend continued on Wednesday as the IBB posted a 1.93% bounce.

Looking at the IBB chart we can see that resistance may come into play at $346.48. A move above this could see the next level of resistance at $367.69. Support for IBB can be found at ~$300 and below this around $270. With an SMAX of 10 out of 10, IBB is showing near term strength versus the asset classes.

 

SIACharts.com specifically represents that it does not give investment advice or advocate the purchase or sale of any security or investment. None of the information contained in this website or document constitutes an offer to sell or the solicitation of an offer to buy any security or other investment or an offer to provide investment services of any kind. Neither SIACharts.com (FundCharts Inc.) nor its third party content providers shall be liable for any errors, inaccuracies or delays in content, or for any actions taken in reliance thereon.

 

For a more in-depth analysis on the relative strength of the equity markets, bonds, commodities, currencies, etc. or for more information on SIACharts.com, you can contact our sales and customer support at 1-877-668-1332 or at siateam@siacharts.com.

 

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