Here’s Why We Trade The Biotechs
Many traders find it easier to anticipate and
find the trend within the broader market averages over individual issues. Fortunately
for us, you don’t have a huge bankroll in order to trade a basket of stocks so
that you can establish a proxy position of your favorite index or sector. The
exchange floors have done us a considerable favor in recent years by setting up
products that allow us to buy or sell the equivalent of a “basket.”
The vehicles that provide this function are called ETFs and HOLDRs. The next
time you feel that you’re in sync with the broader market or sector, take
advantage of it and remember to thank your friends in New York.
10:37:03
Intraday
Sector Alert
In the first hour of trade, Biotechs (BBH)
and Telecom (TTH)
are leading the charge up, while lagging the broader market are Oil Services (OIH)
and Utilities (UTH).
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Our first alert acknowledged that one of the hot
sectors of the morning was the Biotech sector, best represented by the HOLDR
(
BBH |
Quote |
Chart |
News |
PowerRating).
A cursory crunching of the technical picture would have indicated that while the
sector has demonstrated relative strength in the past week as well as in the
early going of Wednesday’s session, there was some potential resistance in
the form of the 200-day EMA.
At this time we put it up on our screen and
waited to see if a pattern would set up, as either the bulls or bears took the
upper hand in today’s battle, drawn in the sand at the 200-day EMA. And that’s
just what we did, we waited….until the technical picture gave us a tradable edge.
11:53:00
Intraday Setup Alert
The Biotech HOLDRs (BBH)
are consolidating near their highs. BBH is trading at 92.04, up 1.37.
You’ll notice it took us close to an hour and a
half before our next alert, and that this time we were clearly seeing the
victory going toward the bull camp, as the alert was “put up” in
green, indicating our bias.
The rest is history, as the bulls put their best
foot foward, charging ahead past the 200-day EMA and giving those who like to
trade market sectors a decisive victory over the bears.
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