Don't Ignore This Chart!

Biogen Inc (BIIB) Suffers Massive Breakdown

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There are pullbacks in uptrends and then flat out trend reversing breakdowns.  We never know for sure which is which until history plays out.  But Biogen's (BIIB) massive selling on Friday has all the makings of the latter.  Any time a company rises more than ten fold in less than five years, it's generally due to very strong core growth.  The one thing investors do NOT want to see is the cutting of growth forecasts.  That's what BIIB did on Friday when they released their latest quarterly results, cutting their revenue forecast from 14-16% growth to just 6-8%.  BIIB was valued for much stronger growth and Friday's announcement sent a shock through its stock and several of its peers.  Trendline support, which held for 5 years was lost on Friday and volume soared to its highest weekly volume since 2010.  BIIB is also one of the top holdings of the IBB (biotech ETF), which has been flashing a negative divergence on its weekly chart this summer.  While a short-term bounce cannot be ruled out, I'd be careful expecting too much out of BIIB given the significance of the breakdown on Friday.  Look at the trendline breakdown:

Happy trading!

Tom

Tom Bowley
About the author: is the Chief Market Strategist at EarningsBeats.com, where he provides stock market education, guidance, and trading strategies using a unique combination of technical, fundamental, and historical analysis. Tom provides EarningsBeats.com members with four portfolios (Model, Aggressive, Income, and Value), all designed to beat the benchmark S&P 500, and a revolving Watch List of hundreds of companies reporting strong quarterly earnings (must beat both revenue and EPS estimates) and exhibiting technical strength as well. These companies comprise EarningsBeats' annotated Strong Earnings ChartList (SECL), from which Tom trades exclusively. Tom writes a Daily Market Report (DMR) for members to include an executive summary, market outlook, sector/industry watch, and trading ideas. Learn More
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