Chart of the Day - Tuesday, February 27, 2024

🏆 Today’s Chart of the Day was shared by Steve Strazza (@sstrazza).

• The SPDR Biotech ETF ($XBI) jumped +5.7% today, marking its best day since November 2022. More importantly, it closed at a fresh two-year high after shattering resistance at $94.

• Steve points out that $XBI broke out with “authority” today, forming a Breakaway Gap. This occurs when price gaps above a well-defined resistance level. They’re the most bullish kind of breakout, representing a decisive resolution. Breakaway Gaps shouldn’t get filled. They’re often found at the start of a new uptrend or as price breaks out of a range.

• $XBI is also resolving higher relative to the S&P 500, suggesting Biotech is likely to outperform. This is a positive display of risk appetite for stocks, as Biotech is one of the more risk-on industry groups.

The takeaway: Biotech ($XBI) is up +8.6% this week, and it’s only Tuesday, marking a momentum thrust. It broke out of a two-year trading range in the most bullish way possible today, and it looks poised to outperform the S&P 500.