The Exacta Bet in Biotech

As has been the case for a while now in this market, the day-to-day reason and rhyme seems almost random. The relative weakness in biotechnology and healthcare stocks, for example, has not made them easy shorts in any manner. 

Case in point: Biotech is actually leading the market by a long shot this morning, an otherwise flattish, consolidating session. Still, the sector is well below its 200-day moving average and has lagged the market for much of 2016. 

However, if the IBB can now overtake its 50-day moving average, which we noted yesterday has been the proverbial brick wall, biotechs may play catch-up a fuel another push higher for bulls and spurt of risk appetite. Note that XBI, the small and mid-cap biotech ETF, is already over its own 50-day. 

So if we do see the exacta bet prove true (XBI finishing in first place, IBB in second), it follows to look for an actionable long idea.

Exact Sciences is a heavily-shorted biotech ripe to follow a similar the technical pattern which INO confirmed higher, seen below on the daily timeframe. Watch for a squeeze over $6.75 now, if biotech plays catch-up.