Don't Ignore This Chart!

Biotechs Weak This Morning But Look To Be Reversing At Key Support

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The Dow Jones U.S. Biotechnology Index ($DJUSBK) broke out of serious longer-term consolidation when it cleared 1800 price resistance in mid-June.  Since then, we've seen a nice uptrend, characterized by rapid advances and steady pullbacks.  The group lost nearly 120 points from Friday's intraday high to today's intraday low, however, but is attempting to print a reversing hammer on its 50 day SMA support.  Check it out:

I didn't annotate it on this chart, but the DJUSBT struggled recently (and back in July/August) after a negative divergence printed (higher price highs with lower MACD readings).  The key for this reversing candle today will be where we close because that candlestick isn't final until 4pm EST.  If the reversing candle is in place, then it would appear that Amgen (AMGN) could be a major beneficiary in the near-term as it's also trying to print a hammer at price and trendline support.

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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