Commodity and Healthcare Related ETFs Lead in 2025 – Bullish Breakout in Biotechs
- Arthur Hill, CMT
2025 is off to a rough start for stocks, but there are still some pockets of strength in the market. Year-to-date, SPY is down 1.73%, QQQ is down around 4% and the S&P SmallCap 600 SPDR (IJR) is down over 6%. ETFs with smaller losses show relative strength (less weakness), but ETFs with year-to-date gains show relative, and more importantly, absolute strength. This is where we should focus.
The table below shows some of the best performing equity ETFs. Three themes are clear. First, commodity-related stocks are performing well with gains in Gold Miners (GDX), Copper Miners (COPX), Materials (XLB) and Energy (XLE). Second, defensive groups are performing well with gains in Healthcare (XLV), Consumer Staples (XLP), Telecom (IYZ) and Insurance (KIE). Third, two groups within the healthcare sector are also performing well: Medical Devices (IHI) and Biotech (IBB).
Note that the stock market timing model at TrendInvestorPro turned bearish in mid-March and remains bearish. Wednesday’s 10.5% surge in SPY was impressive but not enough to reverse this signal or trigger a bullish breadth thrust. Follow-through is what differentiates oversold bounces from bullish breadth thrusts. We will monitor our thrust models closely in the coming days and weeks.
Among the 2025 leaders, the Biotech ETF (IBB) caught my attention because it is in a long-term uptrend and recently broke out of a falling wedge. The chart below shows weekly candlesticks with resistance breaks (higher highs) in December 2023 and July 2024. We also see higher lows in April 2024 and December 2024 (gray arrows). IBB also tagged a 52-week high in September 2024. Price action may be choppy, but there is an uptrend in play with higher highs, higher lows and a 52-week high.
After tagging a new high, IBB plunged in November on news of the RFK Jr. appointment (long black candlestick). A falling wedge ultimately formed and I view this as a correction after the April-September advance. Why? Because the bigger trend is up and IBB held well above the April low. The wedge breakout signaled an end to this correction and a resumption of the bigger uptrend. Short-term, there are two levels to watch as the ETF consolidated around the breakout zone in the 137.5 area. A close below 132 (blue line) would negate the breakout and call for a re-evaluation. A breakout at 141 (pink line) would solidify the breakout and keep the uptrend alive.
Click here to take a trial and gain immediate access our Premium Content. [2]