Biotech stocks are at a critical juncture, strategist says

Biotech stocks have lagged recently, as the Nasdaq biotech ETF, the IBB, has declined for three-straight sessions and is down more than 10 percent from its October high.

On a technical level, the group's charts concern Miller Tabak equity strategist Matt Maley. Here's why:

• On Wednesday, the ETF broke below its 200-day moving average, which has proven solid support for the IBB for much of 2017. This is a red flag for the stocks into year-end and into 2018.

• The IBB has rallied nearly 16 percent this year but began pulling back in October. This raised concern that it could see a decline akin to the one in 2015 amid political uncertainty around drug pricing.

• Two more key levels Maley is watching are 105.5, which was the IBB's high in early November and early December, and 101.5, which is the low touched in August and November. A break below 101.5 would be quite bearish for the IBB.

Bottom line: Biotech stocks just broke below their 200-day moving average, which could have negative implications for the group.

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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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