belbla8- We’ve certainly had the relief rally that you mentioned, most likely for the reason that you stated & the general belief that Clinton would have been bad for the healthcare sector while Trump good due to their opposing stance on Obamacare. I shared my views on that as it pertains to the biotechs in this video & I’m of the belief that this rally, although certainly exacerbated by the fact that biotechs were extremely oversold, at support & with quite a few setting up with some bullish chart patterns, is most likely unfounded & overdone (again, backing out those other bullish factors) & may very likely be reversed soon.
Hard for me to say when & how much the biotechs will reverse but from glancing the charts, I’d say that the pop could very well be over now or very soon. The biotechs are a tough lot to trade unless you keep your position size smaller than usually as they have such powerful price swings that one must take that into account & allow wider than normal stops or you’re bound to get stops out, long or short, simply with the day to day large price swings in the sector.
With that being said, anything can happen so you’ll just have to set a stop, or what I like to do when I realize that a trade isn’t going the way I expected but I’m still not fully convinced that I’m wrong, I will set a series of staggered stops at incremental levels with fractional lots of my position (e.g- stop out of 1/3rd of the position above the first support/resistance level, the 2nd lot over the next level & the 3rd lot over the final level). That prevents seeing my entire position taken out at once only to see the trade go on & play out as expected yet also prevents my losses from running too far out of control.
I’ll study the charts of the biotechs in more detail as soon as I get a chance & let you know if I see anything compelling. G-luck!
-RP