| Stock Market Analysis Update Biotech Index Char |
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| Friday, February 24, 2006 |
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Weekend Update/ Biotechnology Stocks
This update will focus on the Biotechnology Index and specific Biotechnology stocks.
The Biotechnology Index -AMEX (BTK)
The daily chart of the BTK shows that it is breaking out of an ascending triangle. On Friday, the BTK closed up 1.32% on 52 weeks highs at 743.79. This is the best sector to play if you want to play momentum in a boring/sideways market. The following biotech stocks are front running the BTK: CELG, NBIX, and CEPH.
The monthly BTK chart shows that it is in a bullish ascending triangle pattern. It is just under all time highs at 743.79 and is up 4.33% for the month. I believe that biotech's were one of the major catalysts for the market' s bubble bursting.
On the day the news that the human genome strand was identified I remember that Celeragenomics was halted (CRA). This news caused CRA to gap down 70 points lower from where it was halted. Well, this was the day that caused many biotech stocks to begin their downward ascent. It has taken 6 years for the BTK to sell off and work its way back up towards its old highs at 811.60. Only a few biotechnology stocks are participating in the BTK rally. The only stocks that I am recommending are those that are making new 52 week highs: CEPH, NBIX, CELG, GPRO, BMET. I am suggesting these because they have very little over head resistance.
I am not suggesting a broad biotech rally because there is a price cap in a lot of the stocks, such as in DNA and AMGN. That is also why the BBH is not going up as fast as the BTK and the NBI. I have to pick the best performing stocks in this sector.
The Biotech Holders ETF - BBH
On the daily chart of the BBH you can see that it is stuck in it's 3 month downtrend channel. It is the laggard biotech index because AMGN and DNA are still waiting on catching some bids. The BBH will not begin to move until these two stocks start participating in the biotech rally.
Celgene Corp. (CELG)
Celegene's daily chart shows that it is in an ascending triple top triangle pattern. This is also the same pattern that the BTK is in on all time frames. On the daily, you can see that CELG is breaking out of a triple top ascending triangle. It closed up 2.98% at its 52 highs at $73.98 on Friday. Entry for CELG was back in late January in the $64's. The price target is $80.00, but I may raise it as we get closer to that price. We are beginning to enter a trending market for the biotech stocks that I have mentioned.
Neurocrine Biosciences, Inc. (NBIX)
Neurocrine's daily chart shows that it too, is in an ascending triple top triangle breakout. On Friday it made new 52 week highs at $58.00. If you are a short term trader I would buy a back test to $65.50. I am raising the price target to $78.00.
Gen-Probe Inc. (GPRO)
The Gen-Probe daily chart also shows that it is in an ascending triangle. It is a great stock currently stuck in a range, but that will change. On the monthly chart it is in a long monthly rectangle / slim jim. In addition, it held the uptrend line on the weekly. It is one of my favorite stocks. My target is in the $70.00 -- $80.00 range. GPRO will not get momentum until all the biotech's start to make 52 week highs together.
Biomet, Inc. (BMET)
The monthly chart of Biomet shows that, it too, is in a possible ascending triangle. As you can see it has held its 12 year uptrend line. This is a low risk entry point and it is a low risk stock. It may not move fast but that is OK. If it goes up to test resistance around 49.00 that is a good $12.00 gain from entry at $36.00. Furthermore, momentum will pick up the closer we to the $49.00 area.
Current Recommended Positions Related To This Sector (Rotation Call From Oil/Energy into Bio's At The End Of January)
$BTK
$BTK
$NBI
BBH
CELG
NBIX
GPRO
BMET
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