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Bearish count is 260 for Biotech Index

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The Biotech Index (BTK.X) 337.04 -8% is getting drilled lower today as this sector leads the "sector loser" list. That's some "good news/bad news" for QQQ traders depending on what side of the trade your on near-term as biotech stocks have some exposure in the Q's. With a bearish vertical count of $260, the summer vacation may not be over for the bulls yet and this still some potential downside to be had.

Biotechnology Index Chart - Daily Interval

The Biotech Index (BTK.X) has been one of the "tails of the inchworm" we talked about a couple of weeks ago that bulls needed to see firm up if the NASDAQ-100 (NDX.X) or QQQ was going to anchor itself for a move higher. That last two-week however has seen this group continue to slip lower.

Trader's might expect a "bounce" from current levels, but any rally back near 390 becomes another shorting point for bears as they target the lower end of retracement. The extension lower of the regression channel shows it may indeed be a long summer for technology bulls if the BTK.X stays inside its current downward channel.

Today's "culprit" in the biotech sector is component IDEC Pharmaceuticals (NASDAQ:IDPH) $32.36 -15%, which recently triggered a "bearish triangle" pattern at $42. Today, the company announced a delay in its Zevalin Medicare reimbursement.

Other BTK.X components showing marked weakness are Affymetrix (NASDAQ:AFFX) $20.07 -14%, which today just triggered a spread- triple-bottom sell signal at $21, Alkermes (NASDAQ:ALKS) $15.59 -14.5% and Millennium Pharmaceuticals (NASDAQ:MLNM) $11.45 -10.75%.

Jeff Bailey
Senior Market Technician
Option Investor

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