Why IShares Nasdaq Biotech ETF ($IBB) Is Poised For Breakout To New High

Aug. 23, 2012 7:59 AM ETIBB
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Swing and intermediate-term trading of growth stocks .

The iShares Nasdaq Biotechnology ETF ($IBB), which we have been long in the model ETF trading portfolio of The Wagner Daily since August 14, showed relative strength by rallying 0.9% while the S&P 500 was flat yesterday (August 22). More importantly, it closed just above an area of near-term horizontal price resistance. For swing traders who missed our original August 14 buy entry, $IBB is now presenting a secondary buy setup (or a place to add additional shares to existing position). The first chart below is of the hourly timeframe, which shows yesterday's breakout above the near-term technical price resistance (the dotted blue line):

$IBB hourly chart pattern

Shifting to the daily timeframe, notice that yesterday's rally in $IBB also correlated to a breakout above the downtrend line from the July 27 high (the descending blue line). Since this ETF has broken out above resistance levels on two different timeframes, it further increases the odds of $IBB moving higher from here. If looking for a secondary buy entry into $IBB, consider a buy trigger above yesterday's high of $134.32, which would confirm the breakout above resistance:

$IBB daily chart pattern

If you ran a scan on our free technical ETF screener last night, you may have noticed that $IBB is presently on the Potential Breakout watchlist, near the top of list due to the relative strength to the broad market it has been showing. Subscribers of The Wagner Daily newsletter should note our exact protective stop and target prices under the Open ETF Positions section of today's issue. If you're not yet a subscriber, you may test drive our ETF and stock swing trading newsletter risk-free for a month by clicking here.

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