Trading Opportunities in Biotech Stocks
Biotechnology has had a roller coaster ride in recent months with the Nasdaq Biotechnology Index (NBI) fluctuating not only with the rest of the market, but with a life of its own. Though in recent months many traders have lost focus of this market segment there are strong signs of rebirth in both performance and investor interest.
Politicians haven’t been helping the issue any recently with highly visible political candidates such as Hillary Clinton making political issues of high drug prices and stating her intent and willingness to “take on” predatory drug pricing and even singling out individual companies in her addresses and campaign stops.
Even so the NBI and other indicators such as the iShares NASDAQ Biotechnology ETF (IBB) results have investors taking note of a surge in biotech stocks again. IBB is generating a positive pattern including exceeding the 50-day moving average track for the first time this year. In fact during trading on the exchange this week the IBB had its best day since March 2009 with a surge of 5.99%. With plenty of negative action in many market sectors biotech stocks start to present trade opportunities that are worth a fresh look. Heavy volumes and solid price performance are transitioning biotechs into a bullish market.
Examples of positive performance: Gilead Sciences Inc. (GILD) consistently rising since March and not looking back. Regeneron Pharmaceuticals Inc. (REGN) looked somewhat dismal until news of successful results from an eczema medication that shot volume skyward with both price and volume.
Other pharmaceutical news included Pfizer’s withdrawal of plans to merge with Irish firm Allergan after the US Treasury derailed their plans to benefit from tax inversion strategies. This action resulted in positive stock movement for both companies. Allergan CEO Brent Saunders expressed his opinion that treasury officials had intentionally created a new rule to target the merger. This new rule eliminates the tax benefits Pfizer had anticipated by moving its corporate base from New York to Ireland.
Biotech Stocks and Day Traders
Global needs for new medications and solutions to disease control will provide opportunities for innovative biotech companies and their investors to enjoy growth and profitability. Be aware of changing legislation that adds cost to product development and limits market penetration. Drugs and treatments approved in one country may be totally ruled out for others. Look for companies with proven track records of successful testing, approvals, and marketing ventures.
Biotech stocks assuredly have experienced a great deal of volatility but traders performing due diligence and selecting companies with high levels of potential for success and positive financial standing can minimize risk with maximum earnings. Healthcare as an industry is only going to grow as the baby boomer generation ages making products that extend and enhance lives attractive to consumers and investors.
Biotech Stock Trading with SureTrader
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Disclaimer: SureTrader Blog is not intended for U.S. persons. Stock information is not to be viewed as buy or sell recommendations.