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Biotechs Bailing

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What little upside momentum we had today appears to be fading. The Nasdaq has dipped into negative territory, the S&P 500 is within 2 points of doing the same, and the Dow is off its highs. Not much was expected ahead of Cisco's earnings report, but the markets started to decline when Biotechnology stocks did.

Biotechnology Index Daily Chart

Since failing to crack resistance at $541 last week, the Biotechnology Index (BTK.X) has been roaming between 515 and 540. The two-month downtrend is trying to push prices lower, but support at 509 to 495 has not been tested yet. BTK is approaching oversold, but several of its components are facing resistance, which may limit its upside.

Amgen Daily Chart

Amgen (AMGN) has completed a double cup with handle, v-bottom, double bottom type thing, but has met resistance at $63. The 38.2% retracement level, and both moving averages have converged on this area to stifle any advances. The June downtrend is also entering the picture to hold down Amgen, and the Biotechnology Index.

Biogen Daily Chart

Biogen (BGEN) is suffering a similar plight. The stock has completed a small base and has managed to climb above the 50-day moving average, but has met resistance at $58, the 38.2% retracement level. Even if that is surpassed, BGEN could have trouble moving higher, since the area between $58 and $64 is quite messy and contains a lot of technical hurdles.

Jeffrey Canavan
Assistant Analyst

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