A green day to start the week for the major indexes. While the NASDAQ is threatening to bust out to new highs, the DOW and S&P are in more of a taxiing pattern. As our veteran readers know, we prefer that the NASDAQ leads the way. If the junior, tech-oriented index climbs to new heights, the S&P and DOW will likely follow.
However, the NASDAQ got stuck at the a little more than 10,000 and attracted sellers for the third time since the start of June. The first trading day of the summer marks the fifth consecutive day that the NASDAQ traded within a defined range. Since last Tuesday, the index has bounced between 9,748.38 and yesterday’s high 10,059.61. The day finished within a few points of Monday’s peak, at 10,056.47.
Finishing on/near the high usually provides some momentum going into trading session, but the number bulls need to conquer is the post-COVID highwater mark of 10,086.86. On the B-side, ending regular trading hours below 9,740 could encourage selling.
The story to be written is simple, can the NASDAQ smash 10,100 and send a definitive bullish signal? If so, prices are likely to rise into the Fourth of July Holiday and lead us into second quarter earnings season.
Index investors might consider Invesco QQQ Trust (QQQ) for a potential ride higher should the NASDAQ pop through 10,100.
Technology and Drug/Medical product makers dominated the top 10 positions on our proprietary, performance leaderboard. Last week we did the tech thing, this week we’ll do the drug/medical thing.
More aggressive investors might look at ALPS Medical Breakthroughs ETF (SBIO). The fund focuses on small to mid-cap biotechnology and pharmaceutical companies that have one or more drugs in either Phase II or Phase III U.S. Food and Drug Administration clinical trials. Its objective is to track the Poliwogg Medical Breakthroughs Index.
SBIO is on the verge at making an all-time high. If it can finish trading to the plus side of $44, then it will have slayed a bunch of resistance and should be poised for a nice run higher.
From a reward versus risk perspective and our analysis of Global Blood Therapeutics, Inc.’s (GBT) price action, the biotech is one of the more attractive three to 12 months (maybe more) holds in SBIO. The company’s lead candidate, Oxbryta (voxelotor) is in Phase III for an oral, once-daily therapy for sickle cell disease.
Wall Street analysts have a one-year, consensus price target of $107.50 (1), which is 61.34% higher than its June 22, 2020 closing price of $66.63. Shares recently broke a downtrend and are pressing against some resistance at $67. If GBT can get to the better side of $67, then it is possible for the stock to make its way back to the May high around $82. Meanwhile, there is support at $60. Investors might be wise to cut losses if Global Blood finished trading at less than $60.
Investors have potential upside of $40.87 should Global Blood Therapeutics, Inc.’s (GBT) hit the street’s one-year price target and about $7 downside if traders carry the clinical stage, biotech below support at $60. That’s nearly 6 to 1 reward to risk and well above our minimum requirement of 2 to 1.
May all your longs go up and your shorts go down.