XBI - Oversold Biotech Sector down ~50%Lower can always can go lower, and I do believe XBI will hit 75-85 in the upcoming days/weeks. That being said,
- Last 3 times W RSI hit oversold, it provided an excellent entry opportunity.
- Hidden Weekly Bullish Divergence
- Volume climaxing could suggest a reversal as it did the previous 3 times.
What I'm looking for:
- VPVR/cluster of fibs at 75-85 holds
- Regular Bullish Divergence on lower TF's
- Reversal candlestick pattern
- SPX not to shit itself
XBI trade ideas
XBI Turning AroundAfter a whole year of just performing like trash, XBI is now at covid levels. It literally gave up all the gains it made in 2020 in 2021.
It is currently at a monthly SR level and volume area, while also being at the long term trendline. I'm expecting this to turn around and at least hit ~$115 again, but who knows, it's the XBI after all.
Rolled: XBI February 18th 132 Short Call to the 110... for a 1.64 credit.
Comments: Rolled the 132 down to what was the 25 delta strike on side test, after which the underlying promptly bounced back to 103 and change. I originally collected 2.69 (See Post Below) with a 50% max take profit at 1.34, so am revising my take profit to the original take profit of 1.34 plus what I received for this roll -- 1.64 (i.e., 2.98).
Final Shakeout Before Reversal?Biotech stocks have been hammered over the last year, with many currently trading at or below book value.
A reversal is due.
Some indications of a reversal in the short term with possible test of 118-120:
1. Price broke last low but is currently forming a bullish hammer.
2. Bullish divergence on the MACD histogram.
3. ADX below 20 indicates sell off is weak.
Opened: XBI February 18th 100/132 Short Strangle... for a 2.69 credit.
Comments: And back into XBI (rank/implied 54/37) after closing out my January position. 2.69 credit on buying power effect of 11.30 (on margin); 23.8% ROC as a function of buying power effect; 11.9% at 50% max. As usual, will look to take profit at 50% max; manage sides on either approaching worthless or test.
Closed: XBI January 21st 103/127 Short Strangle... for a 1.69 debit.
Comments: Put this on for a 3.39 credit. (See Post Below). Out today via a good until cancelled order to take profit at 50% max with 25 days to go. 1.70 ($170) profit. It's nice to basically have to do nothing defensively every once in a while.
$XBI - Fundamentally Undervalued, Strong Bounce Off Of SupportI posted the wrong chart when doing my analysis on this ticker last time, so I'm here to update my error!
This is a very interesting sector to keep an eye on after it's gotten relentlessly hammered for the past six months.
There are now over 100 biotech stocks selling below cash, meaning these companies literally have more cash on their balance sheet than their entire market cap! Furthermore, there are 300 additional biotech stocks selling at 1/2 cash (50% of their balance sheet is at least half of their current market cap).
There are an insane amount of bargains within this sector, and the entire sector is poised to make a reversal after a strong bounce off of support, and bullish engulfing candle on the daily.
I wouldn't be surprised to see this entire batch of stocks start to perform very well over the following months. A trip back to the 130s is almost inevitable.
$XBI - Fundamentally Undervalued, Strong Bounce Off Of SupportThis is a very interesting sector to keep an eye on after it's gotten relentlessly hammered for the past six months.
There are now over 100 biotech stocks selling below cash, meaning these companies literally have more cash on their balance sheet than their entire market cap! Furthermore, there are 300 additional biotech stocks selling at 1/2 cash (50% of their balance sheet is at least half of their current market cap).
There are an insane amount of bargains within this sector, and the entire sector is poised to make a reversal after a strong bounce off of support, and bullish engulfing candle on the daily.
I wouldn't be surprised to see this entire batch of stocks start to perform very well over the following months. A trip back to the 130s is almost inevitable.
Opening (Margin): XBI January 21st 103/127 Short Strangle... for a 3.39 ($339) credit.
Comments: Selling ~20 delta premium in biotech with rank/implied at 64/38. 3.39 on buying power effect of 11.62 ($1162); 29.2% ROC at max; 14.6% ROC at 50% max. Will look to take profit at 50% max, manage sides on test/approaching worthless.
Biotech primed for a move higher?This one is almost pure intuition. We're in pharmaceuticals earnings season now. Seagen reports after market today. A bunch of other large holdings of XBI report on November 3-4, and a bunch more on November 8. Bonds and tech stocks have made a breakout move upward, and small caps look primed. (XBI is full of small and micro caps.) XBI has had a long consolidation here, and I really like the price action on it today. A lot of other sector funds have had mid-day pullbacks, but XBI has maintained its steady upward slope. It has poked above the 20-day EMA. My guess is that this will be green again tomorrow, so I've rolled the dice on a call expiring October 29. I'm also looking for continuation the next two weeks, with a first target of about 131.75.
The biotech sector may be a big winner into the year’s endThe $XBI has been one of the worst performing ETFs this year as the biotech sector faced important headwinds coming from Washington. A cap on prices has been since dropped, which is extremely beneficial for the long term. In addition, from a historical perspective, November and December are this ETF’s strongest months. The candidates for the Ash conference of biotechs will be announced this week which may prove to be yet another positive catalyst. We are long some $XBI calls for January and continue to hold our small bio spec play, $MBIO.
Closing (IRA): XBI November 19th 110 Short Puts... for a .13/contract debit.
Comments: Opened these for 1.71 credit/contract. (See Post Below). Closing here for .13 results in a realized gain of 1.58 ($158) per contract. Although this remains somewhat weak here, implied volatility isn't the greatest at around 28%, so decided not to roll it out; my preference is for weakness plus implied volatility in >35% in exchange-traded funds to take bullish assumption shots.