Three Reasons To Take Action On Biotech Now

  • February 19, 2004
  • Derrick Hobbs

Based
on my parameters, the Biotech Index
(
$BTK.X |
Quote |
Chart |
News |
PowerRating) is looking
top-heavy.

Look at each of the numbered
items I’ve labeled on the chart below:

  1. Today we hit the 50%
    retracement of the September 2000 high. Yes, that’s right,
    the all-time high.

  2. Today we also touched the
    78.6% retracement of the December 2001 high…also a
    major swing point.

  3. A
    Bearish Butterfly pattern     began on week ending June 7, 2003 and
    today hit the 1.272 of swing X to A to complete the pattern.


Let’s also not forget all of
this is happening against a large Fibonacci price resistance zone from 540-590.
This is a zone that is 10% in its width. Based on the list above, I’m interested
in the short side of this index. At the least, I’ll be tightening up stops on
long positions.

Oh, did you know we haven’t had a “down week”
relative to the previous week close in 2004? In fact, you can go back as far as
December 2003 since the last time we had a down week in this index.

Until next time.


Derrik Hobbs