3 Biotech Stocks for Active Investors

You might not think to look at the market for biotechnology stocks as one where there would be significant short-term edges. After all, the iShares Nasdaq Biotechnology Index Fund ETF (NYSE: IBB) has closed higher four days in a row and is short-term overbought in bull market territory. Even the S&P Biotech SPDRS ETF (NYSE: XBI), has finished higher for three out of the last four sessions, with half of those closes in technically overbought territory.

That said, there have been a few stocks in this diverse and growing area that have begun to move lower in recent days. And should sellers become more aggressive in this sector, some of the first stocks to trade in oversold territory are likely to include stocks like those in today’s report.

Trading lower for three days in a row – the last two in technically oversold territory above the 200-day moving average – shares of Vivus Inc. (NASDAQ: VVUS) continue to pullback in the wake of the stock’s big run-up in the second half of February.

VVUS shares closed lower by nearly 2% on Monday, and are trading at new, short-term lows. The stock has earned “consider buying” 9 out of 10 ratings, and has a positive edge of nearly 2%. And has hinted at above, the last time Vivus traded in oversold territory was shortly before VVUS soared by over 75%.

Prior to that, a three-day pullback that took shares of Vivus into technically oversold territory in late January led to a one-day pop of more than 3% and a gain of more than 5% when the stock returned to new, two-week highs eight days later.

Profit-taking in the wake of new, 52-week highs has shares of Amylin Pharmaceuticals (NASDAQ: AMLN) trading on the outskirts of oversold territory ahead of Tuesday’s session. The stock traded near breakeven for most of Monday’s session before finishing lower by more than three-quarters of a percent, and is now technically oversold above the 200-day.

Shares of AMLN have a short-term edge of almost 1%. The stock also has an 8 out of 10 rating, which puts the AMLN in our “consider buying” category. Amylin Pharmaceuticals has been trading in bull market territory since the second half of January.

Although trading lower for four days in a row, shares of Idenix Pharmaceuticals (NASDAQ: IDIX) have been in a short-term range over the past few sessions. At this point, although the stock already has earned “consider buying” ratings of 8 out of 10, it would not surprise anyone for IDIX to slide lower, breaking down in the short-term and potentially earning a ratings upgrade and even larger, positive, short-term edge.

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David Penn is Editor in Chief of TradingMarkets.com