BiQ: Recap for the Week Ending April 4, 2025 (Premium)
Welcome to the BiQ Weekly Recap #11!
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The XBI closed last Friday at 84.40, opened Monday at 81.59, and closed Friday at 73.64–falling almost 13% since last Friday's close. It reached an intra-week high of 81.66 and a low of 73.27. Over the past two weeks, since it opened at 87.78 on Monday, March 24th, the index has lost over 16% of its value.
Zooming out to the one-month chart, we can see the index has broken all near-term support levels.
Zooming further out to the one-year chart, we can put into perspective the amount of damage that has been done over the past week. One thing to note, however, is that the RSI is now showing very oversold conditions. According to the longer-term chart (not shown), the next significant long-term support level can be found in the 60-65 range, though there is also some evidence of support in the 72-73 range. However, while we can prognosticate all we want, the truth is that only time will tell what happens from here.
Biotech investors had to contend with two major disruptive events this past week. First was the forced resignation of Dr. Peter Marks from the FDA, which I briefly wrote about in my BiQ Portfolio Review article published earlier this week (link below). The second was the announcement of the very extreme set of tariffs imposed by President Trump against US trading partners. I will refrain from talking about the logic, or lack thereof, of the proposed tariffs because that's outside the scope of what I cover at Biotech iQ.
However, I would say that the current selloff in the XBI doesn't seem to be driven by any specific fundamental causes. There is (or at least there was) no financial crisis, no pandemic, and no other significant macro black-swan event–except for recent policy-driven events. However, it's challenging for me to view policy-driven changes as true black swan events, as they were intentionally contemplated, purposeful, and, from my viewpoint, almost seemed designed to create maximum disruption and confusion. Jmtc.
So, what happens from here? I wish I could say, but I have no crystal ball. Until leaders at the FDA and the White House provide some information to help calm investors' frazzled nerves, it is tough to predict which way the market will go from here. In my opinion, the best course of action seems to be to hope for the best but prepare for the worst. This means remaining rational, investing cautiously, and maintaining adequate liquidity. Retail investors are small fish in an ocean dominated by much larger fish with much bigger teeth. When the larger fish decide it's feeding time, sometimes it's safer just to find a reef to hide in until the waters are safe again.