Traders have hammered biotech stocks, with the IBB, the iShares ETF that tracks the sector, losing 5 percent in the last two sessions. But rather than run from the selling, one trader who relies heavily on the charts is diving in.
According to Andrew Keene of Keene on the Market, the IBB had found "support" at its current levels. Looking at both a weekly and a daily chart of the biotech index, Keene noted that the IBB has responded particularly well when it has touched its 50-day moving average.
"We saw buyers back in April," said Keene, referring to the 50-day average, which comes into play at around $348. "And we saw buyers in February and December," when the index also touched that key technical level. Keene also said that the IBB hasn't touched its 100-day moving average since last October. With the IBB above both its 50- and hundred-day moving average at $350, Keene's plan is simple.