Today’s trade is in an ETF that often goes against the direction of the market.
It also tends to have sudden big price moves, and…
When it gets into a trend it can make dramatic moves.
Right now it’s showing signs of being in the beginning of a move.
Read below to learn more.
The Biotech Sector ETF (IBB), has been under performing the market for most of the year.
However, in the last month, it has demonstrated strength above and beyond the market, and now it’s breaking over a key inflection area.
As you can see in the chart below, IBB is breaking above a recent swing high and its 200-day moving average.
These were both important resistance levels, and now they should be support, so IBB should not trade under $110. A better stop would under $109.50
The entry for this trade is over $110.50, but I would not pay more than
If the breakout continues, IBB should reach $115 quickly. If you trade this with the Sept. 115 calls, they could hand you a 50% gain with this initial move.
The move to $115 may not be very exciting, but if $116 is broken then $120 in the next target and that represents a big move and could yields a 200% gain or more in the calls.
Additionally, this sector has the ability to continue to rally even if the general market stalls.
Rick Nartarian, Chief Investment Officer
The American Investor Daily