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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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Brian Sullivan is co-anchor of CNBC's "Power Lunch" (M-F,1PM-3PM ET), one of the network's longest running programs, as well as the host of the daily investing program "Trading Nation." He is also a frequent guest on MSNBC's "Morning Joe" and other NBC properties.

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