Equity indices spent the entire Monday session near their flat lines while the Dollar Index (96.86, -1.05) extended the pullback that began late last week. The index fell 1.1% with the greenback giving up 1.4% to the euro (1.0966).
We still may have the last week of the quarter dynamic in play, although we didn’t see it today. If the market starts a rally tomorrow, I would expect longs to pile on as they try and dress dress up the quarter’s end. We shall see.
Biotech was very week again today, adding to the reversal and weakness that happened on Friday in the IBB. I talked about the possibility of this in last night’s video. We may know as early as tomorrow if this was just a two day event or a shot across the bow and perhaps the start of something more. I
At one point today, IBB was down 5% from Fridays intraday high. That’s a big pullback in just two days and maybe that’s all it will pullback, we’ll just have to see. IBB gapped down hard at the open, tried to rally (about 5 points of the low at one point), but then fizzled at around 10.45.
As you can see in the chart below IBB closed just below the uptrend line (red line). This isn’t a sell signal yet. I always say its what it does on the second day that’s important.
We have had a great run in biotech and its not over, but we did see a few stops today in ANAC, AGIO and RGLS. This 5% pullback in IBB was fast and violent. That’s just how these stocks trade. Any further pullback and we’ll look for some great dip buys with more reasonable entries.
On another note, technology is looking kind of ripe for a move. Some of the cyber stocks, as well as some social media stocks like TWTR and FB are setting up again. CYBR is interesting and even IBM is back to a potentially critical breakout spot. watch the 165.50 level for IBM. Its been there many times and failed, but if can can through that level with volume I think it goes higher.
UVE triggered today.
I am adding IBM as a buy at 165.50 to the P&L tonight. The green lines on the chart below are potential price targets. As always go to the P&L tab on the blog for updates.
See you in the morning.