Healthcare stocks have been performing quite nicely over the past few weeks. Looking at the Biotech Index, it appears more bullishness is on the way for this sub-sector. After a nasty 20% selloff from March through May, biotechs stabilized during the summer months before beginning an uptrend that netted over 160 index points in a three month span beginning in August. The continuation pattern that formed over the past two months is the cup and handle pattern. On the chart below, I've highlighted the cup formation. Just to the right of the cup, you'll see the sideways consolidation, or handle. As its name implies, a continuation pattern is one in which the prior trend resumes after a brief consolidation, or basing period, is completed.


Watch for a breakout above the handle that is forming. Though the biotechs appear poised for yet another move higher, keep in mind this group carries with it a tremendous amount of risk. You should consult your financial advisor before considering a position in this volatile sector.

Chip Anderson
About the author: is the founder and president of He founded the company after working as a Windows developer and corporate consultant at Microsoft from 1987 to 1997. Since 1999, Chip has guided the growth and development of into a trusted financial enterprise and highly-valued resource in the industry. In this blog, Chip shares his tips and tricks on how to maximize the tools and resources available at, and provides updates about new features or additions to the site. Learn More
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