Further to my Biotech on a Tear post earlier this week, today’s action confirms that biotechnology stocks are officially breaking out. The chart below is a weekly chart of IBB, the most active of the biotechnology ETFs. It shows the ferocity of the biotech move over the course of the past month, even in the face of recent disappointing news on the Alzheimer’s front that battered Elan (ELN) and Wyeth (WYE).
Factoring in today’s 3% gain, IBB is set to close at a level not seen since the end of 2001. Note also that the candlestick patterns for the previous highs made in 2004, 2006, and 2007 all show a significant reversal pattern during the week in which those highs were made. With one more day in the week and a large buffer, the current chart pattern is likely to print a bullish pattern for the full week, in addition to the new high.