NASDAQ Biotechnology Index Analysis
Biotechnology has been one of the most buoyant sectors of the US Stock Market, gaining more than 1,600% from its creation in 1993. In this post, we analyse the NASDAQ Biotechnology Index (NBI) for the following weeks.
The NBI index started in 1993 with a base value of 200.00, today it has a value of 3,429.34 pts. It means an increase of 1,614.67% since its creation. The Index includes companies that belong to the Biotechnology and Pharmaceutical industry.
Long-Term Sequence
The first NBI weekly chart shows the index evolution on a logarithmic scale. During the last quarter of 2008, the index retraced close to 36.2% from its top. From the end of this correction, the Biotechnology Index began to develop a rally which started at 590.26 and lead it to 4,194.87 pts in July 2015. When NBI completed this bullish cycle, the index made a 41.06% corrective move that led it down to 2,514.69 pts. Once this retracement ended, the NBI index started a new bullish sequence which has not been able to overcome the previous highs, thus forming a lateral structure of greater degree.
On the second NBI daily chart, the bullish cycle starts at 2,514.69 pts. From this level, the price develops an upper degree consolidation structure. This cycle reached the 3,865.88 pts, from where a sell-off began, down to a 3,177 pts zone. This support coincides with the lowest April 2018 level.
Our NASDAQ Biotechnology Index Vision
The last price bounce gives us hints that the bullish movements could reach the 3,596 to 3,725 area. From this zone, it should continue the previous corrective move. The second leg could drive to the price to a 3,101-3,010 range. We do not discard a deeper movement, down to 2,750 pts. This area could represent a potential buy zone, where NBI could create a new bullish cycle.
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