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Indexes gain as biotech offsets semiconductor weakness

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A bullish session looks to unfold as the major indexes have shrugged off early morning weakness and now build gains to their best levels of the session with the Dow Industrials (INDU) 9,107 +0.57% posting a 51-point gain, while the broader S&P 500 Index (SPX.X) 989.33 +0.45% makes its way above its WEEKLY pivot of 986.35, which is a level I felt bears needed to defend on a near- term basis, and break higher now lends itself to a bullish session.

The Biotechnology Index (BTK.X) 476.80 +2.15% is this morning's early tech-sector winner after bullish comments from Merrill Lynch regarding the sector's recent weakness being attributed to profit taking, which the firm now looks to have run its course, and bullish thought were laid out as the firm believes news flows from the sector will drive the group higher, while valuations still are within historical norms. Adding to gains in the group was CSFB raising price targets on several biotech names (AMGN, IDPH, GENZ, BGEN, MEDI, DNA, HGSI, MLNM, NBIX, ICOS, MYGN and GILD).

The rebound in biotechnology stocks has helped offset weakness in the Semiconductor Index (SOX.X) 375.93 -1.86%, which has bounced higher from a session low of 368.07 as Texas Instruments (NYSE:TXN) $18.52 -9.17% leads the sector loser list.

The NASDAQ-100 Index (NDX.X) 1,214 +0.09% now trades fractionally positive and off a session high of 1,220, which found some strong buying after a morning low of 1,199.47. The NASDAQ-100 Tracking Stock (AMEX:QQQ) $30.18 (unchanged) is just off its morning high of $30.35. In this morning's market monitor, I've profiled a bullish trade in the QQQ for a pullback to $30.12, stop $29.78, target $30.75. If my pullback entry of $30.12 is not hit, then I'm also looking to trade bullish the QQQ on a break above today's high at $30.36.

Shares of Oxford Health (NYSE:OHP) $39.97 +3.09% are on the move higher today. I've profiled this stock as bullish in recent session and noted the company reaffirming FY03 EPS guidance yesterday for a range of $4.17-$4.27. This morning's "gap" higher looks to play into the "running gap" formation after the stock certainly appeared to see a "breakaway gap" on March 5th, when OHP jumped from $30.35 to $33.50 on volume of 5.1 million shares. In this weekend's "Ask the Analyst" column we discussed the "breakaway, running and exhaustion" gap pattern a trader will identify, and actually used OHP as an example where in the past, the stock had shown this type of pattern. Today's gap higher builds promise that OHP's bar chart may be set to repeat similar history.

Jeff Bailey

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