As the Nasdaq hits records, an analyst is betting on a corner of the healthcare sector that is still far from its highs to drive the next leg of the rally.
“The Nasdaq Composite generally breaks higher, and the main reason is that it’s not just more technology. You also have biotechnology lifting its head higher and participating,” Ari Wald, chief of technical analysis at Oppenheimer, told The Washington City Times’s “Trading.” nation” on Monday.
The IBB biotechnology ETF, which owns stocks such as Biogen and Amgen, is up 6% this month. That’s about double the gains on the broader Nasdaq. However, it is still 7% from the February high.
“Speaking of the strength of the Nasdaq Biotech ETF, it really kicked off last year with the break through the five-year resistance,” he said.
He added that this rebound after a consolidation resembles how the ETF traded last summer. Like this year, the IBB consolidated for five months and then broke higher. Wald said both bullish trends boded well for more upside.
Nancy Tengler, chief investment officer at Laffer Tengler Investments, prefers to be selective within the biotech space.
“We’re playing the space with individual companies. Our two largest are J&J, which by the way bought Actelion, one of the largest biotech companies, and AbbVie, which is alternately characterized as pharma and biotech,” Tengler said.
Johnson & Johnson and AbbVie had a mixed month, dropping 2% and gaining 2% respectively.
Disclosure: Laffer Tengler Investments holds ABBV and JNJ.