The AMEX Biotechnology Index (BTK.X) is making some important progress back to higher ground today and, despite recent weakness, is seeing buyer's step up to the plate this morning. It is important to note the BTK is now above resistance near the 550 level on the chart and solidly between this point (which should now serve as support) and the longer-term trend line.
Biotechnology Index Chart - Last Six Months.
Continued buying in the sector and a definitive close above the 600 level on the chart would most likely bode well for large cap names in the sector such as AMGN, DNA, and IMNX. While we are not specifically recommending these names, traders should look to the larger names in the sector to participate first, and these stocks fit those criteria.
QQQ's Looking Strong
The NASDAQ 100 Tracking Stock or QQQ's are showing strength in a big way as a 2+% gain is being seen. Sectors that were weaker earlier in the day have reversed course and are pulsing the COMPX higher.
NASDAQ-100 Index Tracking Stock Chart - 60-minute Interval.
Of the big three, (ORCL, SUNW, MSFT) only Oracle is providing support in the NASADQ 100.
Dow Holding Back NASDAQ Gains.
The Dow Jones Industrial Average is staying in the red at the time of this writing and is likely holding back potential further gains in the COMPX. Traders should watch the DOW carefully for signs of life and a trip above the flat line. If we can get some participation from the DOW, the 34.00 point gains in the NASDAQ should be able to increase its totals.
Dow Jones Industrial Average Chart - 60-minute Interval.
With the NASDAQ showing continuing signs of recovery, money has been flowing from names and sectors that performed extremely well last year in the DOW and moving into technology and telecom. If the Dow can manage to find some buyers, the COMPX could rally into next week.
Things are looking better for the bulls!
Derek E. Baltimore