Biogen Changing Just in Time

After large cap biotechnology stock Biogen resurrected its Alzheimer’s drug during its earnings beat this morning, the stock is higher by roughly 30% as I write this. Considering we are talking about a firm with a market cap over $50 billion, this is a rather unique move. 

As it pertains to the biotechs as a whole, keying off the IBB and XBI sector ETFs, it begs the question of whether the lagging sector is finally ready to wake up and help ignite a year-end broad market rally. Fo that to happen, the IBB needs to negotiate its 200-day moving average, where spot price is currently bumping up against after the gap up today. XBI is still below its 200-day, where I am looking for the $85 level to eventually be the big battleground. 

In the meantime, finding quality swing long setups in biotech remains challenging, which is not all that surprising considering how poorly the sector fared this summer and early-autumn. 

Still, seeing Biogen find firm footing and now waking up with a sizable gap is just what the doctor ordered long-term. 

On the BIIB monthly chart, below, note how the multi-year falling channel was in danger of seeing its bottom fall out recently. Indeed, after years of no progress it would be easy to envision a scenario where biotechs simply broke down under the weight of fears of looming political headwinds and general sector aversion. 

However, those winds can change quickly. And BIIB maintaining the integrity of the long-term channel is a bigger development than many market players may realize, especially if biotech can continue to steadily show signs of improving, not unlike energy and materials of late, too.