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Biotechs still looked to for NASDAQ leadership

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Stocks continue to trade sideways, but short-term bullishness looks to be trying to build in the Biotechnology Index (BTK.X), NASDAQ-100 (NDX.X) and the GSTI Software Index (GSO.X). All three indexes are near session highs and the 60-minute interval charts show what could be domino theory at work.

Biotechnology Index (BTK.X) - 60-minute interval

A move above the 495 level would have things looking bullish again for the Biotechnology Index (BTK.X). This was the group we thought might make a move off the bottom back in September and carry the NASDAQ with it. That's exactly what happened and we want to be monitoring this group for further leadership. A close back above the 495 level would be considered bullish.

GSTI Software Index - 60-minute interval

The GSO.X has also found some resistance today after breaking below its 50-pd MA on the 60-minute chart late yesterday. By using a systematic "fitted retracement" technique and staying consistent with that technique we also get some hint that the BTK.X might be technically stronger than the GSO.X as the BTK.X was able to trade above its 38.2% retracement for two days, while the GSO.X was able to jump above for only one-hour (yesterday at the open of trading).

In essence... a trader trading bullish the biotechs would have potentially had a longer period of time to make a decision on whether or not to liquidate a position as group strength held up better and longer than some other groups.

Jeff Bailey
Senior Market Technician
Option Investor

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