Pfizer Inc. (PFE) gets an FDA approval for its COVID-19 vaccine and Wall Street gives its approval to bulls as a result. The NASDAQ powered its way to a new high, spike proteining almost 278 points. The NASDAQ has clearly pivoted following last week’s bad Afghanistan exit.
After falling out of the technical box we wrote about last week, Monday’s action snapped the tech-heavy index through the top of the same box. The slingshot move would have been more emphatic if it was accompanied by heavy volume.
“As it stands now, the NASDAQ is resting on its current rising trendline. The index has been consolidating for the last month, trading in a tight range. The top of the box is roughly 14,900 and 14,600 on the bottom. The key to the next move will be which side of the box is broken first. It will be bullish if Wall Street pops out of the box and bearish if the bottom falls out.”
Normally, we would be bullish with the combination of a pivot higher followed by a technical breakout taking the NASDAQ to a new high. However, (isn’t there always a however?), our momentum model is underwater and flashing a neutral reading. On the plus side, the three levels we monitor, short-, medium- and long-term mo, are all pointing higher.
So, we are looking for follow through on last Thursday’s pivot and Monday’s breakout. If the NASDAQ can take it up another 20-30 points, that would be enough to flip our momentum meter into the bullish column.
Index investors might consider an exchange-traded fund (ETF) like Invesco QQQ Trust (QQQ) if the NASDAQ can tack on the additional points in the next few days of trading.
Health Care sectors own four of the top five spots on our performance leaderboard. Utilities topped the list. ALPS Medical Breakthroughs ETF (SBIO) is our favorite of the best performers. The ETF rebounded sharply in the last few days after spending much of 2021 in a downtrend.
SBIO reversed course at roughly $41.50. As such, investors might consider setting a downside limit in the neighborhood of $40.50-$40.00. Meanwhile, SBIO could have intermediate-term upside to $50ish. If bulls can push it above $50, then it has a shot to challenge its 52-week high of $64.04 in the longer run.
Kodiak Sciences Inc. (KOD) has one of our favorite charts for SBIO’s holdings. Shares of the biotech crashed in May after investors were concerned one of the company’s possible treatments might be delayed. (1) After tumbling and some back-and-forth trading, shares appear to have found their legs once again.
The current trendline shows KOD should gather some support at its 50-day moving average of $87.87. The maximum downside for the most aggressive holders would be a close below $75, in our opinion. On the upside, if Kodiak can trade above $100, then it could return to where its fall began at $120ish.
1 – https://www.fool.com/investing/2021/05/10/why-kodiak-sciences-stock-is-tumbling-today/