Top market technician says the biotech breakout is just getting started - CNBC

Health care has been left out in the cold amid this market rally.

The XLV Health Care ETF that tracks the space is up only 7% on the year, making it the worst performing sector in the S&P 500.

Despite these woes, however, there is hope in one piece of the health-care trade – biotech.

The S&P Biotech ETF is up nearly 23% through the first half of 2019, while the NASDAQ Biotech ETF is up 13% — almost double the broader health-care space. Cornerstone Macro's Carter Worth says the biotech breakout isn't over yet.

"Biotech has a bit of life to of late, and that is appealing to a general momentum player, which is what technicals are all about, in the end," Worth said Friday night on CNBC's "Options Action."

"The 150-day moving average is actually inflecting upward for the first time in about two-plus years," he 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."

The XBI's 150-day moving average isn't the only technical indicator pointing to a biotech breakout, and after a disastrous end to 2018, Worth is finally seeing some clear signs that this current rally has some real legs.

"Within this period, this head-and-shoulders bottom, we had this well-defined neck line," Worth said, referring to biotech during the back half of 2018. Now, he sees that head-and-shoulders bottom as the first half of another formation that points to an even bigger bullish run.

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

Both the XBI and IBB ETFs were trading slightly higher on Monday.

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https://www.cnbc.com/2019/07/01/top-market-technician-says-biotech-breakout-is-just-getting-started.html

2019-07-01 19:29:30Z
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