Mar 26, 2015

Jeff Cooper: Biotech And The Dollar Blink | Minyanville

Last week's report Biotech Glamours On Fire [subscription required] walked through the potential for a big turning point at IBB 370 (with an outside shot at 390 on this run).

The idealized time frame was the last week of March -- specifically March 27.

On Friday, IBB left a large-range Gilligan Sell signal from opening spike gap near its 374.97 high to close at 366.52.

A Gilligan is a reversal pattern I discovered which plays out when a stock gaps to a new 60 day high but closes at/near session lows.

It will be important to gauge the behavior if IBB pulls back to its 20 day line.

Will Friday's high get tested into March 27 in a quarter-end runup in the strongest sector?

Or will we see window undressing into quarter-end in the group?

It's possible that a large mutual fund is gaming its peers to benefit performance-wise on a relative basis.

In other words, I've heard of a strategy wherea large fund that has big positions in a certain group that's been strong will take offers promiscuously a few weeks before quarter-end. This forces the competition to chase and then switch gears, and then the fund will start feeding out stock just before hitting bids with abandon. This turns tables on the competition and hurt their performance.

After all, this game is graded on a curve.

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