Watching Biotechs, Part 2

On Thursday, biotechs experienced a broad selloff, helping to push the overall market lower.  I published an article at about one hour before the market closed, pointing out the significance in the weakness of biotechs (See "Watching Biotechs").

After the market closed, both of CNBC's daily shows ("Fast Money" and "Mad Money") had a special segment on biotechs.  On Friday, biotechs roared back up, with the biotech  index, BTK, erasing all of its loss from the day before.  It is good to know that people are apparently paying attention to the same things!

Let's take a look at some charts:


On Thursday, BTK almost came down to test its 10-day MA.  But, on Friday, it bounced right back, allowing some breathing room.


iShares' Biotech ETF, IBB, looked a little weaker.  On Thursday, it closed below its 10-day MA.  But, as BTK, it bounced back on Friday.

This still does not mean that the biotechs are out of the danger zone.  Things still seem to be consolidating, especially with IBB being range-bound between 310 and 320.

BIIB was very close to breaking down on Thursday.  A pop of $13 on Friday certainly helped.  Both GILD and AMGN were look bearish and setting up for potential breakdowns.  They went up $6.5 and $3.3 on Friday, respectively!  GILD got a nice bounce on Friday.  CELG has been really strong and set a new all-time high this week.

We will be keeping an watch on this sector.  As I mentioned in Thursday's article, other major sectors are already weak.  If the weakness spill over to the biotechs, I think the selling will continue and the volume will pick up.

Happy Saturday and long weekend!

HappyTrading! ™

Posted to Ecstatic Plays on Jan 17, 2015 — 9:01 PM
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