Biotech Bulls May Be Near Exhaustion: IBB

On any given day, you can easily find a biotech stock that has jumped 20% or more. Sometimes, these gains even sneak into triple digits.
To understand the power of this rally, look no further than the Biotech iShares ETF (NASDAQ:IBB). This ETF has even dominated the red-hot NASDAQ, tripling its performance over the past four months.
However, the big bull run in biotechs looks like it could be nearing exhaustion.
IBB fell more than 2.6% yesterday as traders began to sell some of the stronger momentum names. And just last Friday, IBB dropped nearly 3%, marking the index’s first significant pullback in weeks.
Momentum indicators and strong downside volume are flashing warning signals here. I suspect a retreat to at least $240 for IBB in the coming weeks.
If you’re looking to limit your risk, you should consider cashing out your biotech gains and avoiding this sector as it becomes more volatile. Remember, these furious rallies are usually met with equally powerful selling. Don’t wait for the breakdown to take your gains. If you do, you might be too late…
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