Post by stcks on Apr 6, 2016 11:49:57 GMT
Looking back at the long-term charts, biotech stocks have had a strong multiyear run. That run came to a sudden halt last summer, and since then the biotechs have been in free fall. This begged the question to Jim Cramer: have these stocks finally been punished enough?
Pharma was in the blast zone on Tuesday, when new tax-inversion rules raised doubts about a deal between Allergan and Pfizer.
To gain clarity on the future of biotech, Cramer spoke with Carolyn Boroden, a technician and colleague of Cramer's at RealMoney.com. She saw major signs that the vicious correction for biotech has finally come to an end.
She started by looking at the weekly chart of the iShares Nasdaq biotechnology ETF, IBB. Boroden found that the downside pattern appears to have terminated, with IBB trading sideways since early February.
Boroden found two major patterns in play. The first was a double-bottom formation that was triggered when IBB broke out above the middle-high in the pattern on Monday.
"The double bottom suggests that the pain is over, and there might be some gains waiting in the wings," the "Mad Money" host said.
What really bolstered Boroden's confidence was the second pattern discovered using the Fibonacci methodology. Leonardo Fibonacci was a medieval mathematician who discovered a series of ratios that repeat themselves over and over again in nature. Those ratios can be applied to things such as snail shells, flowers pine cones and stock charts.
Pharma was in the blast zone on Tuesday, when new tax-inversion rules raised doubts about a deal between Allergan and Pfizer.
To gain clarity on the future of biotech, Cramer spoke with Carolyn Boroden, a technician and colleague of Cramer's at RealMoney.com. She saw major signs that the vicious correction for biotech has finally come to an end.
She started by looking at the weekly chart of the iShares Nasdaq biotechnology ETF, IBB. Boroden found that the downside pattern appears to have terminated, with IBB trading sideways since early February.
Boroden found two major patterns in play. The first was a double-bottom formation that was triggered when IBB broke out above the middle-high in the pattern on Monday.
"The double bottom suggests that the pain is over, and there might be some gains waiting in the wings," the "Mad Money" host said.
What really bolstered Boroden's confidence was the second pattern discovered using the Fibonacci methodology. Leonardo Fibonacci was a medieval mathematician who discovered a series of ratios that repeat themselves over and over again in nature. Those ratios can be applied to things such as snail shells, flowers pine cones and stock charts.