NEW YORK (MarketWatch)—Biotech stocks slumped Monday, with the largest biotech ETF down about 1.7% and on track to snap an eight-session winning streak.
The slide comes as some market watchers warn that biotech shares have enjoyed a great run-up and could be due for a drop.
“Biotech must be slaughtered” is how a post over at the iBankCoin blog puts it.
How low could the sector go? For the iShares Nasdaq Biotechnology ETF IBB, -1.87% —the largest biotech ETF by assets—the “most trustworthy level of support” is the 50-day moving average, says Jones Trading’s Dave Lutz on Monday in his What Traders Are Watching note. That chart level (shown in the adjacent graphic) has held four times since December, he says.
The biotech ETF is struggling, Lutz said, as key holdings Biogen, Gilead Sciences and Vertex Pharmaceuticals slump on Monday. Biogen BIIB, -2.17% is falling after Stifel Nicolaus downgraded the biotech company on valuation concerns, while Gilead GILD, -1.51% is down in the wake of a warning about its hepatitis C treatments. Vertex VRTX, -3.95% offered disappointing news about a drug for cystic fibrosis.
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