Christian Tharp Talks The Biotech Industry And The IBB

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  • Christian Tharp was recently a guest on #PreMarket Prep, a daily trading idea radio show hosted by Joel Elconin and Dennis Dick.
  • The biotech expert and author of “Five-Star Stock Watch” delved into several issues, including his expectations for the broader market, his target for the S&P and other key indices and the biotech industry.
  • Of particular interest, Tharp shared some significant insight into the biotech sector.
  • Christian Tharp started by noticing that the topic of interest over the past few weeks has been “this first real correction in four or five years,” which he believes is not over yet.

    When asked about the iShares NASDAQ Biotechnology Index (ETF) IBB, the expert responded, “I think the easiest way to describe biotech lately has been ‘ugly.’ Obviously, there’s a lot going on there, and I don’t think anybody is too surprised.”

    Related Link: Biotech Bears Spark Good Vibes For These ETFs

    Until recently, biotech was conceived by many investors as the best industry to put money in, Tharp continued. Now, this generated somewhat of a run-up, which made things get nasty when the selling started. This is what happened with the IBB, he assured.

    The Surprise

    The biotech analyst went on to mention that what did surprise him in the past couple of weeks, a period over which he expected to see the market move higher, was that biotech did not take part in the rally.

    For those keeping an eye on the biotech industry, Tharp recommended taking a look “going back about three years.”

    Drawing a trend line in the IBB starting November 2012, “it’s going to go right underneath your April of 2014 low, you’ll notice it’ll touch exactly where your August of 2015 low is. You have this perfect little trend line that the market is telling us the IBB deems it important; and, sure enough, just earlier this month we tested again, two days in a row and held both times.”

    So, if investors look at that, that is sort of a “line in the sand” that Tharp is drawing “for the biotech industry based on the IBB. That line is sitting right above 290, right now. So, if we close a nice solid 285 […] I think biotech takes another leg down.”

    “I’m not sure biotech has a lot to give, Tharp stated, commenting that if the S&P hits 2050, it’s a 10 percent run-up, while biotech sits more or less in the same place as it did two weeks ago.

    Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.

    Image Credit: Public Domain

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    Posted In: BiotechExclusivesInterviewGeneralChristian TharpPreMarket PrepVetr
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