Biotech stocks just had their best session of the year, and the best could still be ahead

Biotech stocks are enjoying a solid winning streak, and some strategists forecast the group could see further upside as one popular exchange-traded fund just broke through a round-numbered level.

On Wednesday, the iShares Nasdaq Biotech ETF (IBB) rose by 4.1 percent, for its best session of the year. This market the third straight session in which the ETF gained more than 1 percent. With a more than 7 percent rise this week, it is pacing for its best week since the election. And with an intraday peak of $316.33, the ETF is hitting its highest levels since January 2016.

The key for the ETF, according to Piper Jaffray chief market technician Craig Johnson, was breaking above the $300 mark.

"It's been about five times we've tried to break above that $300 level on the IBB, and we're just now starting to do that," Johnson said Tuesday on CNBC's "Trading Nation."

Having left $300 in the dust, he thinks the group could continue to rise.

According to Johnson, the next level of resistance is $340. And within the fund, stocks like Celgene or Regeneron appear to be coming out of "very nice bases, so I think the support is finally there to really see this work."

The bounce in biotech appears to be due, Johnson said, in part to a rotation out of some technology stocks and into biotech names.

Another ETF that contains biotech and healthcare stocks, the XLV, hit another intraday high on Wednesday, positively affected by biotech names like Incyte and Biogen.

On Tuesday, the New York Times reported that President Donald Trump plans to issue an executive order on drug prices that focuses on the easing of regulations rather than the lowering of prices. This is clearly being seen as good news for an industry that has recently fallen prey to increasing scrutiny by the press and the government.

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Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

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