Biotech stocks and the Biotech Sector have been a volatile space for investors this year. One month they are rallying, the next they are pulling back and bearish.

Right now, the Biotech Sector ETF (NASDAQ:IBB) is the latter.  The Biotech Sector (IBB) has fallen around 10 percent in the past 2 months.  So what’s next?

Let’s look at the daily and weekly chart for IBB with DeMark Indicators.


DeMark indicators are on the verge of creating some meaningful headaches for IBB bulls.

On a daily time-frame, Biotech bulls can hang their hat on the fact that there remains an active TD Countdown Buy 13, but there are only 5 more days for that signal to be confirmed (by way of bullish “Price Flip”). Meanwhile, a new TD Buy Setup has started (Bar 2 in green) and, more worrisome, the price is pretty close to TDST Level Down at $101.36 (dotted green line).  A break below that, let alone below the Countdown Buy 13 “Risk Level” at $98.73 (a/k/a secondary exhaustion level), would mark a meaningful change of character for this group.

IBB Biotech ETF Daily Chart

biotech sector ibb trading chart_bearish demark indicators_news_december

In a vacuum, daily charts are important because they offer tradable levels. But when a similar message is shown on longer time-frames, such as the case for the weekly chart of the IBB, it is time to question the investable thesis around a security.  Things aren’t dire yet for the IBB weekly, but they are heading in that direction. A break of weekly TDST Level Down at $96.83 would clear the way for the bears.

IBB Biotech Weekly Chart

biotech sector ibb trading chart_demark indicators_ investing_news_december

Lastly, and just to underscore the potential risks for IBB biotech longs, on a monthly time-frame there’s a confirmed TD Sell Setup 9, and the Countdown Sell indicator is on bar 12 of 13.

Mix the worrisome technical setup with the ever-growing noise for price controls and other assorted political non-sense, and it is not hard to make the case that a nasty re-pricing of the entire group may be in the offing.

Disclosure: I’m short the IBB against a basket of mid and large cap biotech names that I am long.

Good luck and good trading!


Twitter:  @FZucchi

Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.


Not Investment Advice – Please read investment disclaimer.