ETF Chart of the Day: Biotech

ETF Trends

An ETF that will likely squarely be in focus this week is centered on the Biotechnology industry, iShares Nasdaq Biotech (IBB). The ETF took a large hit on Friday, falling more than 3% and touching its 50 day moving average for the first time since June of this year.

Furthermore, trading volume in IBB was very heavy, at 942,000 shares versus average daily volume of about 520,000 shares. Our colleagues at iShares, the issuer behind the product note that about half of the 117 individual Biotech names in the underlying index are slated to release earnings for the quarter this week alone, and furthermore, eight of the top ten holdings are among those releasing earnings. Thus, it would not be a venture for one to say that “this week should be interesting and impactful in the space”, and perhaps Friday’s heavy activity in the ETF is just the beginning.

Names that we expect to hear from in terms of expected earnings releases on Tuesday and Wednesday of this week include ALXN (which is the top holding in the fund), REGN (2nd largest weighting), AMGN (3rd largest weighting), and GILD (4th largest weighting). Later in the week, CELG, BIIB, PRGO, and MYL are also scheduled to report quarterly results (these names are also among the top ten holdings in the fund). We note that despite Friday’s drubbing, IBB is still among the better performers across the ETF landscape year to date, as it has rallied an impressive 33.59% YTD versus the S&P 500 Index up 14.17% during the same time frame.

Given the fact that holders of the fund are likely sitting on nice short term and long term capital gains, going into the end of this tax year we would expect to an acceleration of activity in the fund, and direction will likely become much more clear after this week of impactful earnings reports.

iShares Nasdaq Biotech

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