This Week's Take (and a Trade on Biotech)
It's been a choppy week for most traders, with too many events in the way.
Good morning everyone! You may be wondering why there’s been some radio silence on my end. Well, it’s been a busy week in the market and as such, those are weeks where I tend to lay low and see how things shake out.
Sometimes, “less is more” in this type of tape.
On Wednesday, we had the Fed announcement. Thursday brought jobless claims before the open and features a Yellen testimony at 10 ET. Tomorrow is not only Opex, but a quad-witch expiration. That creates all sorts of wonky price action as futures rolled last week and into this week and as some of the indices rebalance.
Bleh - like I said, it’s why I usually lay low during these types of weeks. However, I did post a lot of ideas on my Twitter stream this week (feel free to peruse), while the DDOG and PLTR trades we looked at paid nicely.
That said, I want to look at Biotech via the IBB.
Trading Biotech Stocks
I want to preface this with one caveat: The Fed news did not sit well with the IBB. Nor gold. Because the Fed talked about raising rates by the end of 2023 (but not now), this pressured the groups.
For the IBB, it gave us the pullback I wanted to the 10-day moving average and breakout area near $158 to $159. This zone was resistance in March and April and the dip is a nice reset.
Keep in mind, the IBB did break below this area on Wednesday, although it recovered nicely by the close. I want to see if we can get a push over $159 (or a 4H-up rotation over $158.79 for the more aggressive traders). A daily-up over $160.50 would be great.
If we can get that, longs can look for a potential push to the $163 to $164 area as their first objective.
A break of Wednesday’s low (at $156.15) likely puts the 21-day and 50-day moving averages in play. However, I’m not looking for a deeper pull. I want a rotation higher.
Side Note: Did anyone else see the ~50,000 contracts that traded in the PINS June 25th $75 calls vs. OI of roughly 750? Dang.