For those old enough to remember the four horseman in the biotech arena, AMGN BIIB CELG and GILD, we know rough times have come over them. Of course CELG is being swallowed by BMY, but BIIB has made little effort to recoup much of the massive 34.3% weekly loss ending 3/22 and still trades 34% off most recent 52 week highs. GILD’s chart trades wide and loose, hallmark bearish characteristics, and sits 16% off its most recent yearly peak. AMGN is clearly the best of the dwindling group, just 8% off its recent ascent. It is digesting a 14.6% combined advance during the 3 weeks ending between 8/2-16, with each week seeing firm volume, and each one stronger than the prior one. The stock put up a weak performance this week losing 5.9%, while the XBI ROSE 3.7%. Good risk/reward, in my opinion, is setting up here.
Round Number Roadblocks:
There has been some troubling signs among leading stocks in the healthcare space. That is never a good sign, but the group has never been very strong in a significant way. STE and EXAS fell hard below their 50 day SMAs on big volume on 9/9, dropping 6 and 10% in the process. We are big proponents of round number theory and par is the biggest of them all. Stocks that trade to that figure often hesitate and good examples of that were leaders RGEN and NVCR. RGEN gave even more of a warning things were likely to head south with a bearish gravestone doji candle there on 8/1. It now hugs the 80 figure. NVCR came close to the 100 number on 8/21, and both names now trade in bear market mode off 20% from most recent highs.
The hangover from the CELG announcement just 2 sessions into 2019 is still being felt by BMY. It still trades 22% off most recent 52 week highs. There are some lukewarm signs from its chart, as it has advanced 6 of the last 8 weeks. Below is how we looked at the name and how it appeared in our last Healthcare Note from 8/20. The 200 day SMA, a very simple way of defining the trend, had given this name headaches as it traded below it for 11 months until recently. It did record dubious candlesticks at the very round 50 number Thursday and Friday with a spinning top and bearish engulfing respectively. One positive is that is ended a long series of lower highs and lower lows.