Big Sale in Litte Pharma: 3 Drug Stocks for the Next 3 Days
Continued weakness in generic pharmaceutical stocks and biotechs could lure buyers off the sidelines by week’s end. Here are three stocks likely to attract the attention of the value-conscious and risk-averse.
Shares of ^ARIA^ have pulled back for four days in a row heading into trading on Tuesday, including three consecutive closes in oversold territory. Dipping below its 200-day moving average on Monday, the stock is at its most oversold since early August, when a sharp sell-off from year-to-date highs led to a five-day, 30% rally.
Also recently off year-to-date highs, shares of ^CELG^ have dropped for three out of the past four sessions to finish in oversold territory ahead of trading on Wednesday. The stock is back above its 200-day moving average after spending most of the month of August trading below that level. Tuesday’s oversold close marks the stock’s first oversold close since the stock resumed trading above the 200-day.
The last stock in today’s report is another drug company whose stock is experiencing aggressive profit-taking after rallying to new highs. ^AKRX^ has closed down for two in a row heading into trading on Tuesday, and have closed lower for 7 out of the past 9 sessions since rallying to a year-to-date high in mid-September.
Buying stocks after they have pulled back rather than after they have made new highs may seem counter-intuitive, but as we can see from the recent behavior in stocks like ARIA and AKRX, new highs are often met by swift – if not aggressive – profit-taking. And this is all the moreso in volatile markets when traders tend to want to lock in gains first and answer questions later.
So when looking to buy stocks, always be willing to think outside the box. The best way to buy low and sell high is to buy new lows, rather than new highs, especially for short term traders.
ARIA, CELG and AKRX were spotted using a trading resource called The Machine. To learn more, visit us at TradingMarkets.com.