Here is an update to my “Just Say No to (Most) Drugs” blog post from last weekend.
Despite the broad market rally, biotechs as a sector did not make new highs.
This was an excerpt from my latest Weekly Strategy Session (please click on that hyperlink for details about trying it out)
I still think select biotechs like ONVO can make some noise to the upside. But, make not mistake, the monstrous bull run is showing its age.
In addition to the divergences discussed above, also consider the leading biotechnology stocks. The biotechs have been clear leaders for a while now. But they did not make fresh highs last week, seen on their sector ETF weekly chart below.
And that weekly RSI negative divergence we have been tracking is playing out, along with a bearish MACD cross last week. The only way I see the biotechs coming out of these divergences for an imminent, sustained leg higher is if the year-end chase truly plays out in bubble fashion. Otherwise, this is a leader showing its age after a spectacular run.
