This Biotech ETF is Breaking Out to the Upside

From Gary Savage: Today’s chart of the day focuses on a well-known biotech ETF, the SPDR S&P Biotech ETF (NYSE:XBI), which is threatening to break out even further to the upside.

The XBI, which counts about $2.37 billion in assets under management, has already jumped 50% since its yearly lows hit back in February, and could soon break out of its month-and-a-half consolidation soon.

biotech

If the XBI does continue to climb, the next resistance zone will be around the $72-75 level, as you can see in the chart above. XBI shares were up another $0.74 (+1.12%) to $66.63 in premarket trading this morning. Now let’s take a look at XBI’s top holdings.

XBI – Top Holdings

XBI tracks the S&P Biotechnology Select Industry Index, so its makeup is quite a bit different from the larger iShares NASDAQ Biotechnology Index ETF (NASDAQ:IBB) ($7.33 billion in assets), which tracks the NASDAQ Biotechnology Index:

IBB – Top Holdings

Investors may want to consider the IBB as well here, considering it’s also bounced nicely off its yearly lows (albeit not nearly as strong of a bounce as XBI). The biggest difference between the two is that XBI’s focus is more on mid-cap biotech stocks, while IBB is heavily weighted toward larger companies.

XBI’s expense ratio of 0.35% is also significantly lower than IBB’s 0.47%, so for investors looking to buy and hold for the longer term, XBI may make a bit more sense.

Charts and technical analysis courtesy of Gary Savage.