One Technician Says The Breakout In Biotechs Is Just Getting Started – Here Are 3 To Buy Right Now

Biotechs are headed for a big rally, and analysts say these 3 stocks in the sector could see double-digit upside ahead.

Billionaire’s Secret Strategy Beats Passive Investing By 5,500%

This strategy survived the ‘87 crash, the dotcom bust and the subprime panic—and turned $1K into $66.7 million…compared to $1.2 million buying and holding the S&P 500. This year will bring new trends...laws…tariffs…increased volatility…maybe even a market crash. To use this strategy to protect, revive, and multiply your retirement savings by leaps and bounds - even in a bad economy - click here. [ad]

Read More

Stocks have been rallying this week after news broke of the trade truce between the U.S. and China from this past weekend. 

But one sector has been left out of the rally: healthcare.

In fact, the XLV Healthcare Sector ETF—which tracks the sector—is up just 9% so far this year, making it the worst performing sector in the S&P 500.

However, biotechs are one bright spot in the space. The XBI S&P Biotech ETF is up just under 24% so far in 2019, and one expert says the breakout in biotechs looks likely to keep going.

“Biotech has a bit of life of late, and that is appealing to a general momentum player, which is what technicals are all about, in the end,” Carter Worth of Cornerstone Macro said to CNBC.

“The 150-day moving average is actually inflecting upward for the first time in about two-plus years,” Worth said. “That’s an appealing setup to my eye, and I think it’s a good place to be long in an otherwise languishing area of the market.”

Source: TradingView.

But the 150-day moving average isn’t the only interesting thing about XBI’s chart. There’s another technical indicator that signals that this breakout has legs.

“Within this period, this head-and-shoulders bottom, we had this well-defined neck line,” Worth said, pointing to the end of 2018. And now that head-and-shoulders bottom has turned into another pattern that indicates an even bigger rally ahead.

“Ultimately, the thinking is, that this big cup-and-handle is resolved up and out. I like this,” Worth said. 

Source: TradingView.

Among the XBI ETF’s top holdings are familiar names in the biotech space including Array BioPharma (NASDAQ: ARRY), Alexion Pharmaceuticals (NASDAQ: ALXN), Mirati Therapeutics (NASDAQ: MRTX), and Incyte Corp (NASDAQ: INCY).

But of the top ten holdings in the ETF, analysts are most bullish on Sarepta Therapeutics (NASDAQ: SRPT), Immunomedics (NASDAQ: IMMU), and Fibrogen (NASDAQ: FGEN). 

Analysts rate all three stocks Buys and their price targets suggest 37.44% upside ahead for Sarepta, 95.58% upside for Immunomedics, and 41.3% upside ahead for Fibrogen over the next twelve months.

There are risks inherent in all investments, which may make such investments unsuitable for certain persons. These include, for example, economic, political, currency exchange, rate fluctuations, and limited availability of information on international securities. You may lose all of your money trading and investing. Do NOT enter any trade without fully understanding the worst-case scenarios of that trade. And do NOT trade with money you cannot afford to lose. Past performance of an investment is not necessarily indicative of its future results. No assurance can be given that any implied recommendation will be profitable or will not be subject to losses. Information provided by the Company is not investment advice. The Company is not a registered investment adviser, stock broker, or brokerage. You agree that the Company does not represent, warrant, or take responsibility that any account will or is likely to achieve profit or losses similar to those shown. Examples published by the Company are selected for illustrative purposes only. They are not typical and do not represent the typical results of all stocks within the Company’s software or its individual scans and searches. No independent party has audited any hypothetical performance contained at this Web site, nor has any independent party undertaken to confirm that they reflect the trading method under the assumptions or conditions specified.