$XBI - Positive Divergence

The SPDR BioTech ETF $XBI has been an underperforming for a long time. However, there's clues that could be changing. There's a nice positive divergence on the RSI. The down trend line was broken after several failed attempts. The stock is above the 50 day MA for the first time in over a year. Both the 20 SMA and the 50 SMA are curling upwards. RSI is positive. I like this long above the possible resistance area of $96.91.

The tripled levered bull equivalent $LABU looks just as good with even better volume.

I like the ETF long above $96.91. With a target up to the 200 SMA. of about $114.00

Under $96.91 and it's probably best to stay away.

Thanks for checking this out. Good luck to all.

Comment:

The importance of finding and respecting support & resistance lines was on full display today with this setup. Again price was rejected at the $96.91 level. If you got anxious and bought at the high on the break out and held to the close you're now a bag holder.

Dow Theory teaches us that closing price is the most important price of the session. Often times it's best to buy on the close as long as you're closing above resistance. If you're not glued to a computer screen all day it is sometimes best to sacrifice a better entry price and guarantee yourself a position above resistance.

As trend followers we're looking to get in when resistance is flipped and becomes support. The longer a range is established and the more times it is tested the more violent the move tends to be in either direction.

Keep this one on the watch list.

Comment:

This did not hold up well at all. It's so important to respect support & resistance levels. This is clearly demonstrated on this chart.

Comment:

Just a hideous chart. Double top seems to have formed. Hard rejection at the resistance levels. Beneath the moving averages. Yuck. Probably trading back down to the $80 - $81 range.