Finding Strength In Weakness
While it’s a great strategy to trade with the trend in stocks and futures, it
is also a good idea to watch for instruments that are holding up while the rest
of the market is going the other direction. Since April 2000 the Nasdaq
Composite
(
COMPX |
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PowerRating) is down almost 50%, while the Biotech Index
(
BTK.X |
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PowerRating),
despite being beaten down, is still up around 25% for the same period.
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It is interesting to note that prior to the beating it has taken
since the start of November, the BTK was grinding out some steady gains while
the Naz was starting to ride its great downturn in earnest. Some are managing to
hang on even while the majority of the equities in the market are being taken
out behind the woodshed. For example, Pharmaceutical Product Development
(
PPDI |
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PowerRating)
is finding support around the 50-day moving average and the 61.8% retracement of
its move higher.
Genzyme
(
GENZ |
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News |
PowerRating), mentioned today in the Insights
From The War Room, received some aid yesterday around the 200-day
exponential moving average, and it has bounced to a 14% gain in today’s trading.
Fundamentally GENZ is helped by the fact that it is one of the rare biotechs
that are profitable.
Some of these issues may even be starting to lead the way if we
are indeed setting up for a push higher. Biochem Pharmaceuticals
(
BCHE |
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PowerRating),
profiled on the TradersWire yesterday, is setting up in a bullish
ascending triangle and may be looking to make a run at its previous high.
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