Topping Patterns in the Hottest of the Hot?

03/27/2015 7:00 am EST

Focus: ETFS


Chris Kimble, of Kimble Charting Solutions, takes a technical look at this biotech ETF against the DAX index and the S&P 500, since he feels it’s the hottest key global stock index of late in the hottest global sector. Chris stresses the importance of leadership and offers a suggestion in case further weakness takes place.


chart
Click to Enlarge

I am a fan of watching leadership. When leaders get into trouble, they can have a huge influence over the broad markets. The above chart looks at the S&P 500 and the hottest sector and hottest key global stock index of late. Over the past year, Biotech ETF (XBI) is up almost 5-fold more than the S&P 500 and the DAX index from Germany is up twice as much.

So how are the hottest of the hot doing?

The 2-pack below looks at the patterns in the DAX index from Germany and Biotech ETF (XBI).

chart
Click to Enlarge

What does the hottest of the hot have in common? Strong rallies over the past year that took them to the top of rising channels. Both look to have created reversal patterns (bearish wicks) at (1). Both are attempting to break rising support at (2).

As I shared at the start of this post, I humbly feel keeping a close eye on leadership is very important. Investors might benefit from keeping a close eye on these two in case further weakness takes place, because selling pressure in leadership assets can spill over into lagging areas.

By Chris Kimble, Founder, Kimble Charting Solutions

Related Articles on ETFS

Keyword Image
The Omen
12/07/2017 10:50 am EST

The probability of an equity market correction over the next few months is slim to none, so there co...