Need a New Drug? 3 Biotech Stocks for Short Term Traders
For many traders and active investors, biotechnology stocks represent a challenge. Should these stocks, known for their potential for sudden volatility, be avoided altogether? Or will these stocks over time tend to conform to the same sort of general laws of supply and demand as any other stock?
If you agree with the first idea, then rest assured that there are plenty of other stocks in the market to trade, and that it is entirely possible to trade, invest and build winning portfolios without ever buying a biotechnology stock.
But if you are more inclined to agree with the latter idea, then here are three biotechnology/pharmaceuticals stock whose recent price action suggests that they may be well worth your attention as a trader or active investor. This is especially so if there is follow-through selling in these stocks over the next few days.
Shares of Optimer Pharmaceuticals (OPTR), for example, have begun to retreat toward levels at which buyers have historically entered the market. The stock is back in bull market territory – trading above its 200-day moving average – and is experiencing its second significant pullback since then.
The last time OPTR pulled back to these levels was only a few weeks ago at the beginning of the month, shortly before a rally that took the stock higher for eight out of the next nine trading days.
Another stock that has pulled back in bull market territory is Jazz Pharmaceuticals (JAZZ). Like OPTR, shares of JAZZ have closed lower for three days in a row, with the most recent two finishes in technically oversold territory (OPTR just entered this territory on Wednesday’s close). Also finishing lower for five out of the past six trading days, JAZZ has experienced a number of sharp, multi-day sell-offs since August. Each instance, however, was met with strong buying and a subsequent rally that took the stock back to or near recent short term highs.
For traders looking to take the other side of the biotechnology market, stocks that have become overbought in bear market territory have historically been those that have tended to underperform in the short term. Here, shares of Human Genome Sciences (HGSI) are potentially a good example. Trading in bear market territory since late May, HGSI recently closed higher for four days in a row, the last two in technically overbought territory below its 200-day moving average.
All three stocks in today’s report were pulled from stock research available through The Machine. To learn more, click here.
David Penn is Editor in Chief of TradingMarkets.com