A Nice Sweetener

Monday morning spikes higher in the likes of ARQL BPMC CLVS QURE, and especially ARRY on the back of a $10/$11 billion buyout offer from PFE are all helping to propel the biotech ETFs (IBB, XBI) upwards.

To be sure, biotech bulls needed a dose of adrenaline early this week, as the XBI ETF, seen below updated on its daily timeframe, was in dire straits after last Friday's poor showing. Indeed, that base could have easily resolved lower yet in the context of a sloppy chart, with bios failing to muster much of a bounce off the late-May/early-June lows like the rest of the market did two weeks ago. 

However, some good ole M&A is providing at least a respite for bulls. And now it remains to be seen if the sector at-large can build on these deals. At the moment, I have been patiently holding a SAGE long inside Market Chess Subscription Services. I nearly gave up on the trade early last week, but I see it is printing multi-quarter highs as we speak. I am looking for other bios to get involved with, too, if this sector momentum has legs, such as ANIK.

Beyond that, the XLV, sector ETF for healthcare, has really come on in recent weeks. The ETF is now flagging tightly above all daily chart moving averages and would jive with the idea that biotech, perhaps, has put in a good low as we head into the heart of summer trading after this week's FOMC show. Naturally, the M&A is a nice sweetener, and would make things easier for biotech bulls if it feeds on itself and galvanizes other firms to take the plunge with buyout/merger deals.