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Resistance is Turning Into Support for This Biotech Stock

A lot of eye balls on the health care sector these days, and for good reasons. Traditionally, this has been one of the more defensive sectors, and it seems to be picking up that role at the moment.

On the weekly RRG for US sectors, XLF hooked sharply upward, moving rapidly back into the leading quadrant after having dropped into weakening. If you are set to approach this market from the long side, that means this is one of the sectors to go for stock picking.

On the weekly RRG for the Health care universe, VRTX stands out with a similar hook.

Turning to the price chart of VRTX, as shown at the top of this article, reveals that the old resistance level around $195-200 has now turned into support. Since 12 March, that area has been tested numerous times on very volatile trading days, but it was never broken at a closing level.

The more this happens, the stronger the support becomes. Apparently that is an area that attracts buyers.

All in all, given the strong rotation of XLF and the strong rotation of VRTX against XLF, it looks like dips into this support range $195-200 are buying opportunities with limited risk, as stops can be put just below this support area.

Please #StaySafe.

--Julius

My regular blog is the RRG Charts blog. If you would like to receive a notification when a new article is published there, simply "Subscribe" with your email address.

Julius de Kempenaer

Senior Technical Analyst, StockCharts.com

Creator, Relative Rotation Graphs

Founder, RRG Research

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Original author: Julius de Kempenaer
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